Here's How Much You Can Expect From Companies This Year

As Amazon, Google, Meta, and others lay off thousands of employees, labor market data indicates that there are still plenty of jobs and workers have bargaining power, it's hard to reconcile this with mass layoffs at giant companies like these.

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Despite the fact that thousands of workers across tech, finance, and media have abruptly lost their jobs in recent months, the national unemployment and layoff rates remain historically low, and there are millions more job openings than there are people to fill them.

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Another data point that works in favor of workers is that 64% of employers say they are planning to increase their employee raises this year, a 23% increase from 2022, based on a Salary.com survey of HR professionals representing over 1,000 employers conducted in the fall of 2022.

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Garry Straker, Salary.com's vice president of compensation consulting, says the generous raises aim to reduce turnover and combat inflation.

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Nearly a quarter of HR leaders report that it is more difficult than last year to hire new employees, and a fourth say that constant turnover is affecting their ability to meet business objectives.

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With inflation eating into employees' earnings, Straker believes that employees now have a higher expectation from their employers that they pay a competitive wage in order to keep pace with rising costs, even as wages continue to decline.

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Employers aren't offering raises that are inflation-matched, however, and are instead refusing to do so. Straker states that companies are planning to give their employees an average raise of 4.1% over the next year. It is true that inflation has cooled from the highs of mid-2022, but it remained around 6.5% as of December of last year.

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In addition, bosses also need to be strategic about offering more to those employees who are most likely to quit in the near future. This means that some workers may be able to benefit from larger increases than others.

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Those who earn lower wages are more likely to quit their jobs for another job that pays slightly more, so for them, a 4.5% raise might be seen as an incentive to stick with the company, while other workers might see something closer to 3.5%, Straker says.

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There are an estimated 1 in 5 workers quitting their jobs in industries such as health care, software and networking, hospitality and leisure, and manufacturing, which are all experiencing high turnover, according to Trade Algo. In each of these sectors, upwards of 1 in 5 workers are quitting their jobs. It has been reported that aerospace and defense workers are staying longer than their jobs, as well as workers in the business services industry.

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The survey was conducted in September and October of 2022, just before companies like Meta, Amazon, Salesforce, and HP announced mass layoffs. Several organizations may have adjusted their raise plans since then.

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According to Straker, since the tech sector only accounts for 4% of the labor force, "layoffs do not seem to be ubiquitous," in this industry. “It seems that there are certain industries in which this type of thinking is more prevalent and it is more of a follow-the-leader mentality."

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As Straker points out, layoffs at some of the biggest companies are receiving a lot of attention at the moment, but some of the smaller companies continue to have difficulty finding qualified employees.

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During one of his conversations with a client in the Northwestern part of the U.S., he gave an example of how the company was hiring a key role in HR and several offers were made to highly qualified candidates, but none of them accepted since another offer had been made to them. "That is just one example," Straker says, "but there are a lot of inequalities in the labor market.". It is unquestionably true that there are a lot of layoffs grabbing headlines, but there are also a lot of employers that are still recruiting aggressively.