|Unemployment at the end of August 2019 was reported by the United States Bureau of Labor Statistics (BLS) at a record low of 3.7 percent and the United States Bureau of Economic Analysis (BEA) reports an increase rate of 2.0 percent for gross domestic product (GDP) in the second quarter of 2019.
However, despite our continued economic growth and low unemployment rates, salary budget increases remain stagnant, merely creeping along each year.
Unsurprisingly, WorldatWork is projecting that the 2020 salary budget increases will remain at a median of 3.0 and an average of 3.3 percent. The average of 3.3 percent is up just one-tenth of a percent from actual 2019 average increases.
There are very few industries expected to have increases above the overall 3.3 projections. However, “Educational Services,” once again, is projected to have average budget increases of over half of a percent less than the average overall increases.
Conversely, smaller organizations with under 500 employees or under $100 million in revenue are projected to see average increases of up to three-tenths of a percent more than the overall projected increases.
Conference Board and The Kiplinger Letter also report 2020 salary budget increases of approximately 3.3 percent.
The projected 3.0 – 3.3 percent increases are expected nationally, with no states projecting increases above or below the expected 3.0 – 3.3 range. (WorldatWork)
If the average salary budget increase projections continue to inch upward by one-tenth of a percent each year, we may finally see the Pre-2009 increases, of 3.8 – 4.0, again in the next five to seven years – that is, if economic growth continues its upward trend.
According to CNN, a recession could be on the horizon. In an article from earlier in the summer of 2019, CNN cites a Duke survey where almost half of Chief Financial Officer (CFO) participants in the United States believe that a recession will occur in the middle of 2020. By the end of 2020, the number of CFOs is just under three-fourths. The main reason cited for the belief in impending recession is “shortage of skilled workers.” (Duke/CNN)
According to the Duke survey, cited by CNN, the top concern for just under fifty percent of executives, is the “ability to hire and retain qualified employees.”
On the contrary, Deloitte’s predictions, in their “2nd Quarter 2019 United States Economic Forecast,” are slightly more optimistic. The forecast predicts a “55 Percent Probability” of the economy remaining at “baseline” level, and a “25 Percent Probability” of the economy going into a recession.
As we near next year’s presidential election, there is no definitive way to determine what the economy’s outlook will be. But – it seems, for now, we are wedged in the 3.0 – 3.3 salary budget increase range inevitably while the economy remains consistently unpredictable.