Salary increase projections help workers gauge how much they should ask for when negotiating a raise. Projections can also reveal whether wage growth is outpacing inflation or falling behind.
Research from The Conference Board points to a 4.4% increase in employee salaries in 2023 and a 4.1% pay bump in 2024. These percentages can fluctuate as macroeconomic conditions and other factors change. If you want to negotiate a raise or determine how much you should be getting paid, this guide can help.
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Overview of the current job market
The current job market is still strong as 353,000 nonfarm employees joined the workforce in January 2024. The unemployment rate remained at a steady 3.7%. Remote job opportunities are here to stay and have been stabilizing in a post-pandemic world.
A low unemployment rate and many companies seeking qualified workers have resulted in a labor shortage. These shortages impact some industries more than others, but they mean that companies may be offering higher salaries to fill those jobs.
Shortages are a contributing factor to the growth of remote and hybrid work. Remote opportunities give employees more choices and allow them to pursue higher salaries. Online jobs also result in more competition among employers to find talented workers. A remote approach can help companies save money on office expenses. It’s another catalyst that has resulted in many employers giving their workers more flexibility.
Historical analysis of salary increases
Salaries trailed inflation in 2022 when the consumer price index saw record-breaking growth. However, the trend reversed in 2023 as worker’s salaries grew at a faster rate than inflation. In November 2023, almost 60% of workers earned higher inflation-adjusted income in 2023 compared to the previous year. Continued raises combined with a declining rate of inflation contributed to the outcome.
Factors affecting salary increase projections
Salary increase projections present an average growth rate, but a lot of effort goes into calculating the rate. Below are some of the factors that impact salary increase projections and how much extra money you could earn.
Economic factors
Various economic factors come together to impact salary increase projections. Rising inflation results in higher salaries because workers need extra money to compensate. While real wages can still decrease, wages stand to increase as the costs of goods and services go up. Rising interest rates can put pressure on rising wages, as higher interest rates make it more expensive to borrow money and can restrict businesses.
Geopolitical policies and tensions can also play a role. Global politics and issues can impact the supply and demand of goods and services. These vibrations create a ripple effect across the entire economy.
Economic factors can make cash less accessible and result in higher rates, but you don’t have to end up with a high interest rate.
Gross domestic product (GDP) growth also plays a role in salary increases, as a positive year-over-year growth rate can lead to expansion and higher wages. Negative GDP growth indicates less consumer spending, and companies may have to cut costs to stay afloat.
Industry-specific factors
Some industries are in better positions than others to raise workers’ pay. Industries with large addressable markets, high growth rates, and healthy profit margins can support higher salaries. These companies may increase the salaries for new jobs to attract top talent.
Companies in declining industries or ones that face significant vulnerabilities may have to slow their wage growth rates and offer less desirable salaries.
The demand for certain skills can impact a company’s salary growth. Jobs that require high-demand skills command higher wages and typically have higher growth rates.
Projected salary increase trends for 2024
Salary increases vary for each industry. You can use the 4.1% growth rate as a benchmark in the negotiating process, but you should also look for salary growth rates in your industry.
If you have had your job for a while, check new postings to see what the average salary is for your line of work. Businesses have had to raise starting salaries to attract more workers. You can use elevated salaries as leverage or apply to higher-paying jobs that have the same responsibilities as your current job.
Potential challenges and risks
Projected salaries suggest real wages can be positive in 2024. However, there are a few challenges and risks to keep in mind.
The first risk is that interest rates may remain elevated for longer. Many people expected the Federal Reserve to begin lowering rates in March, but there is currently no timeline for rate cuts to begin. Higher interest rates can make companies more hesitant to give out raises since the cost of borrowing money will increase.
Rising interest rates are one macroeconomic condition that can disrupt salary projections. Higher inflation will hurt real wages, and geopolitical tensions can impact revenue, profits, and hiring demand. If companies have to pay more money for raw materials, it will hurt their profit margins and result in fewer raises.
Employees currently have the job market on their side as many shortages mean companies must have higher starting salaries to compete. Those higher salaries can help with negotiations and allow you to secure a raise.
What can employees do to prepare for this projected salary increase?
The projected salary increase is only an average. You can work to beat the average and get a higher raise by applying these strategies.
Enhance your skill set and qualifications
Some skills are more in demand than others. Becoming more versatile and mastering high-paying skills can help you explore better career opportunities. Developing skills relevant to your current line of work can make you more valuable and result in a higher raise.
Learn negotiation techniques for salary discussions
Even if salaries go up in your industry, you have to negotiate a raise. Researching similar wages in your industry while demonstrating your value can improve your chances of winning a negotiation and getting a raise. You can practice with your friends or family to feel more confident when you approach your boss.
Improve your job performance
Improving your job performance can make you an indispensable part of the company. This status can help you negotiate a higher raise, and your boss may be more inclined to give you the money you deserve. Improving your job performance also strengthens your work ethic and can help you land a better job if your current employer does not pay what you are worth.
Look for side hustles
Side hustles allow you to earn extra money right away, and some of them let you develop skills that can help you get a raise. You can choose from many side hustles that let you earn an additional $500 per week. That extra $500 per week adds up to $26,000 per year, and you can earn a lot more with some side gigs.
You can explore numerous weekend side hustle opportunities. Tapping into multiple income streams can lead to financial independence sooner and give you more choices to grow your income.
PRO TIP! Create additional income by doing surveys and playing games.
You Can Earn More Than What the Experts Project
Salary increase projections serve as guidance for setting your raise. But you can increase your income by more than the projection. Receiving a higher raise, pursuing better career opportunities, and working on side hustles can increase your earnings far beyond the salary increase projection.
FAQ
What is a good salary in 2024?
A good salary depends on your location, age, industry, experience, and other factors. According to the U.S. Bureau of Labor Statistics, median weekly earnings was $1,142 per week in Q4 2023. That comes to $59,384 per year.
Will remote work trends influence the projected salary increase for 2024?
Remote work will influence the projected salary increase for 2024. Employers will have to compete with each other for a smaller talent pool, which can elevate salaries.
Will the projected salary increase for 2024 affect hourly wage workers?
The projected salary increase for 2024 will affect hourly wage workers. However, you have to negotiate a raise and ask your employer. Not everyone will receive a raise, but doing good work and taking a proactive approach can improve your chances.
