CHICAGO, Ill., September 24, 2018 – While salaries are projected to rise in 2019, U.S. employees shouldn’t expect to bring home more in total cash compensation in 2019, according to new data released today by Aon plc, the leading global professional services firm providing a broad range of risk, retirement and health solutions.
Aon’s 2018 U.S. Salary Increase Survey of 1,026 U.S. companies projects base pay budgets to increase to 3.1 percent in 2019, the highest increase since the 2008 recession. However, variable pay, such as incentive or sign-on bonuses and special recognition awards, is expected to drop to 12.1 percent – the largest drop since 2010, bringing total cash compensation down from 15.5 percent to 15.2 percent. While variable pay has steadily increased from 2010 to 2015, the second half of the decade signals a reverse of this trend to fund increasing salary budgets.
“Employers are viewing compensation holistically and are taking from variable pay to increase salaries,” explained Ken Abosch, broad-based compensation leader at Aon. “Ultimately, our data indicates that employers are putting more behind an initial higher salary in an effort to be more attractive in recruiting talent, rather than focusing on the promise of a large bonus in the future. This approach in turn leads to less total earning opportunity.”
Additionally, this year’s survey asked new questions of participants specifically related to expected impact of new regulatory changes and minimum wage increases on their projected salary increase budgets. Ninety-nine percent (99%) of respondents anticipate no change following minimum wage increases due to the Tax Cuts and Jobs Act. Additionally, following recent changes in minimum wage requirements, 71 percent of companies reported no change in salary increase for employees that earn above minimum wage.
Salaries by Industry and Geography
Workers in most U.S. cities can expect to see salary increases in line with the national average for 2019. Cities with higher costs of living may see higher increases, such as San Francisco (4 percent) and Los Angeles (3.7 percent). Additionally, some may see higher-than-average increases in variable pay. These cities include Houston (16.5 percent) and New York City (14.9 percent).
Aon’s research also shows variation by industry. Workers in the construction (3.4 percent) and insurance – P&C (3.4 percent) industries are expected to see higher-than-average salary increases in 2019, while workers in education (2.6 percent) and transportation services (2.8 percent) are expected to see lower-than-average increases. Variable pay budgets by industry vary widely, ranging from 19.1 percent in the energy industry and 17.5 percent in food/beverage/tobacco to 5.6 percent for workers in construction and engineering.
For another view on interpreting Aon’s Salary Increase Survey results, view its Pay Insights blog.
Aon plc (NYSE:AON) Aon is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.
Lindsay Goldstein +1.847.284.0392; Lindsay.email@example.com