Salary budgets are set to increase in 2023, but it’s not the only financial development on the horizon for the new year. Thanks to some new research, we have some insights on the overall state of salary budgets for 2023.
According to Salary.com’s Annual National Salary Budget Survey, the “standard” 3% annual raise is being overtaken by a new baseline: a 4% raise. As you might guess, a corresponding increase in salary budgets is also coming along. The survey, conducted in June 2022 and featuring responses from over 1,000 organizations, found that 48% of U.S. employers are planning higher year-over-year salary increase budgets for 2023, building on the trend from 2022. Some employers are planning even bigger: approximately 25% of surveyed employers say they are planning to give raises between 5% and 7% for 2023.
Three primary categories of increases are playing a part in the planned budgets for 2023: general increases, merit increases, and equity/market adjustments:
- General increases:5% planned median increase, 2.3% planned mean increase
- Merit increases:5% planned median increase, 3.4% planned mean increase
- Equity/market adjustments:0% planned median increase, 1.5% planned mean increase
- Total increases:0% planned median increase, 4.4% planned mean increase
Compared to 2022, companies are looking at 2023 as a chance to improve on previous pay increases. 42.5% say their salary budgets will be higher than 2022, and 5.5% say their budgets will be “significantly” higher. 38% report their budgets will stay about the same, 12.7% report lower budgets, and only 1.4% say their budgets will be significantly lower than 2022.
Other surveys have put a spotlight on the challenging nature of the IT and cybersecurity world, with high competition for qualified candidates bumping up against relatively low salary increases. According to data from IT employment consultants Janco Associates, mean compensation for all IT jobs combined rose only 2.05% in 2021. IT execs in big tech companies, however, got an average raise of 3.47%, compared with middle managers at 1.2% and “general” staffers at 3.23%. Most unexpected of all: IT professionals with certifications saw a decrease in pay bumps and bonuses, 1.2%, while non-certified skills saw an increase in bonuses at 9.5%. With a potential shortage of viable candidates for certification-requiring roles, these trends could have tech teams reconsidering salary priorities in the year to come.
2023 is shaping up to be another year of high competition for top talent, and salary budgets will play a major role in determining which organizations succeed. For more detailed insights, you can get the whole report at Salary.com now.
By Daniel Midoneck