Workers have received big raises during the last couple of years, but that may fade soon amid economic uncertainty, according to a survey released Monday.
Nearly half (49%) of 600 business leaders surveyed this month by ResumeBuilder.com said they won’t give cost-of-living adjustments (COLA) to employees next year, and 26% said they either won’t or may not give any kinds of raises at all. Of those who are giving COLA, 48% will give a bump of 3% or less. Additionally, more than half anticipate layoffs in 2024.
This could be bad news for workers as they continue to catch up from more than two years of scorching inflation that ravaged their paychecks. Even though wages rose sharply for many over the past two years, helped by a labor shortage, those increases were mostly gobbled up by inflation. Only recently, as inflation has cooled, have workers started to regain lost purchasing power, but that looks like it may change again. Nearly three-quarters of business leaders said the job market has shifted back to favor companies, ResumeBuilder.com said.
“Cost of living raises are incredibly important to the majority of the workforce who may already be underpaid and whose wages have not kept up with inflation,” Stacie Haller, ResumeBuilder.com’s chief career advisor, said. “Although the inflation rate has slowed down to 3.6%, any increase that is less than 4% is not an increase to one’s earning power and wages.”
What is a cost-of-living adjustment for companies?
Cost-of-living adjustment, or COLA, is an adjustment made to people’s paychecks to keep pace with inflation. It’s meant to help workers keep the same standard of living from year to year.
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A well-known example is Social Security. Each year, the government provides a COLA to recipients’ benefits checks based on the rate of inflation. For 2024, they’ll receive a bump of 3.2% to account for inflation.
Reinstatement of COLA is also one of the demands of auto workers on strike after being burned by inflation the past couple of years.
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Are wages going up in 2024?
You may have near-even odds of it, if you’re a standout worker at a company that’s giving raises.
Overall, 74% of business leaders still said they planned to give raises — but not to everyone, ResumeBuilder.com said. Half of business leaders say 50% or less of employees at their company will receive a raise, and most (82%) of the raises would be performance-based. If you’re lucky enough to get a raise, 79% of companies said those raises would be bigger than in recent years.
If you’re a middle to senior-level employee, your chances may be slightly higher because one-third of business leaders think it’s most important to compensate senior, executive-level employees, ResumeBuilder.com said.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
