Companies Plan Increased Wages, Salaries for 2022

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Companies Plan Increased Wages, Salaries for 2022

Economy HR & Employment Law News | December 16, 2021
By: Chris Geehern

Massachusetts employers plan to boost the wages and salaries of workers by the highest amount since the Great Recession next year as companies struggle to attract and retain employees in a tight labor market, a study to be released tomorrow by Associated Industries of Massachusetts (AIM) finds.

The annual AIM HR Practices Survey shows that employers forecast average merit-pay increases of 3.3 percent for 2022, up from 2.71 percent last year. It marks the first time since 2007 that companies have budgeted increases of more than 3 percent.

The acceleration in wages is being driven by several industry sectors, including wholesale/retail (4 percent); professional, scientific and technical services (3.5 percent); and manufacturing (3.44 percent). Employees of small companies can expect a larger bump in wages at 3.55 percent than those who work for medium-sized companies (3.27 percent) or large enterprises (2.92 percent).

The AIM compensation projection matches the national projection by the global human resources organization World at Work.

Kyle Pardo, Executive Vice President of AIM HR Solutions, said that 90 percent of respondents reported salary increase projections for 2022 that are equal to or higher than increases for 2021. Additionally, 40 percent of respondents said they budget for salary adjustments beyond annual merit increases.

“Recruiting and retaining employees was a common theme in 2021, and it challenged employers to reflect on compensation practices. Employers are struggling to identify qualified candidates and had to think creatively about referral bonuses, higher starting pay rates, and promises of remote work,” Pardo said.

The survey of 168 human resources executives comes at the end of a chaotic year for Massachusetts companies as the ever-mutating COVID-19 pandemic cast employers in the unaccustomed roles of taking employee temperatures, monitoring the use of masks, and preparing for a potential vaccine mandate. The impact of the public-health crisis was apparent as survey participants identified workplace safety as their most serious concern heading into 2022.

Other priority concerns included recruitment and retention, compliance, compensation and diversity.

Amid all the challenges, however, 82 percent of survey participants rated their current business conditions as good or excellent compared to 66 percent a year ago. AIM’s monthly Business Confidence Index has similarly shown employers remaining optimistic about the course of the economy despite COVID, the worker shortage, inflation and supply chain disruptions.

The survey found:

  • Health insurance premium increases declined in 2021 for all plan types. The average increase in premiums was 5.9% for 2021 compared to 6.2% for 2020.
  • There has been a significant increase in companies offering cost-containment plans such as high- deductible health plans (HDHP) and consumer-driven health plans (CDHP) moving from 7% in 2020 to 12% in 2021.
  • Eighteen percent of companies project that some of their workers will remain remote indefinitely, though only two percent currently have 100 percent of their employees working remotely.
  • Twenty-one percent of employers planned to mandate vaccinations prior to the Biden Administration’s federal order.
  • Thirty-five percent of employers are scheduling meetings for times that don’t conflict with school drop off, remote schooling set-up or lunch.
  • The average value of referral bonuses increased across all employee classifications, but the average value of sign-on bonuses declined.