Preliminary 2025 Salary Budget Increase Projections
August 22, 2024
By: Lauren E. B. Belcher
WorldatWork’s annual salary budget survey for 2024-2025 was recently released. The highly anticipated survey was published earlier this year than in previous years as many sources began making predictions for salary budget increases.
Generally, most sources agree that projected 2025 salary budget increases will be around 3.5 to 3.8 percent, with WorldatWork predicting the latter, overall. With actual average, overall, 2024 salary budget increases at 3.9 percent (WorldatWork), the 2025 projections do not appear to be significantly less than 2024.
Payscale, in conducting their own annual salary budget survey, projects a slightly more conservative salary budget increase, around 3.5 percent, for 2025. Additionally, Willis Towers Watson expects 2025 salary budget increases closer to 3.9 percent.
As is typical, certain industries are expected to exceed or fall below these average projections. The “Education” industry remains at the lowest end of the projections cited by Payscale and WorldatWork, while “Government,” “Construction,” and “Real Estate” industries are among the top percentages projected for 2025.
Projections, by individual state remain around the 3.8 percent that is projected nationally, with no statewide projections deviating more than 0.1 percent.
Though the 2025 projections are near the actual 2024 increases, several factors involving the economy and government policies could influence the actual 2025 salary budget increases.
Economically, the United States Bureau of Labor Statistics (BLS) reports a 2.9 percent increase, overall, to the Consumer Price Index (CPI) from July 2023 to July 2024, slightly less than the percent increase from the year prior. Currently, inflation is experiencing a downward trend, but could see numbers up to 3.0 percent by the end of 2024, according to The Kiplinger Letter. In addition, Kiplinger forecasts that the annual inflation rate could be nearing the Federal Reserve’s target of around 2.0 to 2.5 percent by the end of 2025’s first quarter.
Additionally, as of July 1, 2024, the current Presidential Administration’s overtime protections ruling was finalized. Current rulings increase the exempt salary threshold to an annual salary equivalent of $43,888 through the end of 2024. As of January 1, 2025 the requirement will increase to an annual salary equivalent of $58,656. (United States Department of Labor)
As economic uncertainty could be influenced by the upcoming Presidential election in November 2024, it could be argued that actual salary budget increase percentages for 2025 may trend lower or higher, depending on policies that could be set by the new Presidential Administration.
With the forthcoming 2025 exempt salary threshold requirement, the uncertainty of the economy, and the nearing 2024 presidential election, some flexibility, and consideration of economic factors and potential new or updated policies, could play a paramount role when organizations are budgeting for salary increases in 2025.
