Workers' pay raises won't be much in '08

[Omaha Steve]

http://www.usatoday.com/money/workplace/2007-08-13-pay-raises_N.htm?csp=34

By Stephanie Armour, USA TODAY

Workers hoping for big raises next year are in for disappointment. Employers will be holding the line on pay increases, following a trend of reining in compensation costs to stay competitive.

Employers are planning an overall salary budget increase of 3.9% next year, according to an August survey by WorldatWork, an association of human resource professionals that conducts one of the most comprehensive salary budget surveys. That follows similar modest salary increases of 3.9% in 2007.

The pay raises modestly outpace consumer inflation, which was 2.7% for the 12 months ending in June.

The restrained pay increase poses a challenge for employers who must find other ways to retain and recruit employees, and it's a shift from the early to mid-1990s, when raises were around 5%.

"For people who are doing adjustable-rate mortgages and stretched-out credit cards, this is not good news," says Anne Ruddy, president of WorldatWork. "And on top of it, employees' health care costs have also gone up. Companies are responding to globalization and shareholder pressure."

Other data support the somewhat gloomy outlook. Employees should see only flat to modest growth in pay increases, according to the preliminary findings of a report to be released this month by Hewitt Associates, a benefits consulting firm based in Lincolnshire, Ill. Companies gave employees about a 3.7% average pay increase in 2007, with 3.8% projected for 2008.

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