This blog post is comprised of excerpts from ERI’s January 2022 National Compensation Forecast. For a more in-depth look at ERI’s salary projections, download the complete white paper here.
Each quarter, ERI examines the rates at which salaries have increased and provides guidance on expected increase for the upcoming year. These rates are calculated using ERI’s Salary Assessor and ERI’s Salary Increase Survey & Forecast.
Actual compensation movement in the fourth quarter of 2021 (published January 1, 2022) saw an increase in growth to 0.94% from October’s 0.48% growth. The past 4 quarters have seen inconsistent growth with a July increase of 1.23% and 0.44% growth in April. However, the overall growth over the past 4 quarters has been 3.12%.
While previous quarters showed inconsistent measures of available labor in the marketplace (called slack), current economic indicators all point towards a lack of labor in the economy. A tight labor market frequently means that organizations must increase compensation to attract employees.
Overall Compensation Trends
January salaries have increased by 0.94% (see Table 1) over the October 1 data release. This rate of growth is higher than the expected quarterly rate of 0.63%, and the October increase of 0.48%. Growth over the past year has been 3.12%, with an average quarterly growth of 0.78%. To put this into context, the average quarterly growth over the past 20 years has been 0.6% (see Table 2). Over the same 20-year period, the average January increase has been 0.55%. Over the past 20 years, January increases (fourth quarter) have been lower than increases throughout the rest of the year, and the current quarter is not consistent with that trend.
It should also be noted that the data in the Salary Assessor may be expected to follow structure increases instead of budget increases. This is because the Salary Assessor tracks how much structures move within organizations as opposed to budget increases. Because of this, comparisons are made to the 2022 structure figures instead of the 2022 budget figures.
Download ERI’s January 2022 National Compensation Forecast white paper for a deeper dive into salary data by year, mean salary by category, and forecasts into 2022.
