Highest Salary Hikes in 15 Years Fueled by Inflation and a Scarcity of Top Talent

Despite economic worries about the Fed’s efforts to tame inflation by raising interest rates, the job market not only remains resilient but shows signs of the highest salary hike since 2007, Bloomberg reported.

A survey by workplace consultant Willis Towers Watson (WTW) found that companies plan to boost salaries by 4.6% next year, marking the largest overall increase in 15 years. This is higher than an earlier WTW prediction of 4.1% for 2023. Three out of four of the employers surveyed reported struggling to attract and retain quality talent, and more than two-thirds of companies (70%) surveyed reported spending more than they originally planned on salary budgets this year.

Related: ‘Ask For a Raise Now’: Salaries Aren’t Keeping Up With Inflation. Here’s What to Do.

The results signify that the labor market remains resilient, despite massive layoffs in the tech and crypto industries, and employers are still fighting to recruit and retain talent. However, WTW warns that employers shouldn’t just prioritize salary bumps as a way to win quality employees.

“With attraction and retention issues persisting, employers should consider the overall employee experience and not just salary increases,” Lesli Jennings, North America leader of work rewards and careers at WTW, said in the report. “By focusing on health and wellness benefits, workplace flexibility, careers and DEI, organizations can position themselves as the employer of choice for their current and prospective employees.”