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In today’s dynamic labor market, compensation has become a critical factor in attracting and retaining top talent. Recent salary increases far exceed the historical 3% per year over the pre-pandemic decade. The numbers tell a clear story.

Compensation Costs on the Rise. 2024: Up 4.1%. 2023: Up 4.5%. 2022: Up 5.5%. 14.1% Total Increase Over 3 Years.

Compensation costs have risen 4.1% over the past year ending June 2024, following similar increases of 4.5% in 2023 and 5.5% in 2022. This marks a 14.1% total increase in compensation over three years, putting significant pressure on employers to stay competitive.

For unionized workers, the pressure is even more intense, with compensation costs spiking by 6% over the past year alone.

Benefits costs are also climbing, rising 3.5% in 2024 after a 3.9% increase in 2023.

Staying Ahead of Market Trends

Looking ahead, companies cannot afford to lag behind in their compensation planning. While merit and annual increases may be slowing at 3.9% projected for 2025, there are still critical factors that demand proactive adjustment:

  • Pay transparency regulations are becoming more widespread, making it crucial to offer equitable and competitive pay to attract top talent.
  • Rising minimum wages will continue to impact compensation structures, further increasing the pressure to offer attractive pay packages across all job levels.

Prepare Now!

KMA can partner with you to refine and adjust your organization’s internal salary ranges, starting with a full external market assessment for comparative data.

Revising your compensation strategy now will ensure your organization remains an employer of choice, capable of attracting and retaining talent in an increasingly competitive and transparent labor market.

Reach out to the experts at KMA today to transform your compensation strategy and secure the talent you need for success – in 2025 and beyond.

Source: US Bureau of Labor Statistics