Modest pay hikes next year could leave some workers lagging inflation
Summary
Employers in the U.S. are expected to give modest pay raises averaging 3.5% in 2027. These increases may not fully keep up with inflation, which rose 3.4% yearly as of July, potentially reducing workers' purchasing power.Key Facts
- The average salary increase in 2027 is predicted to be 3.5%, including all types of raises.
- Inflation was rising at about 3.4% per year in July, close to the projected pay increase.
- Companies are focusing raises on top performers rather than giving small increases to everyone.
- High-tech and banking industries expect slightly higher raises, around 3.7% to 3.8%.
- Retail and industries with fewer job opportunities may offer lower raises that do not keep up with inflation.
- Employers face budgeting challenges due to economic uncertainty and aim to use pay hikes to keep key workers.
- Most companies have not finished deciding their official salary budgets for 2027.
- 2023 had the highest salary hikes recently, but salary increases are expected to slow down next year.
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