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Employers raise salaries to recruit, but reduce bonuses and other payouts: Aon

September 26 2018

Salaries are projected to rise 3.1% in 2019 — the highest increase since the 2008 recession, but US workers are not expected to take home more total cash compensation, according to a report by Aon plc.

The reason is an expected drop in variable pay such as incentives, sign-on bonuses and special recognition awards. Variable pay has risen steadily since between 2010 and 2015, but the second half of the decade has seen a reverse of this trend in order to fund increasing salary budgets.

“Employers are viewing compensation holistically and are taking from variable pay to increase salaries,” said 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.”

Salary increases for 2019 do vary by geography with workers in higher cost-of-living areas to see higher increases, such as San Francisco with a 4% increase and Los Angeles with a 3.7% increase.

By industry, construction workers will see higher-than-average salary increases at 3.4% as well as insurance workers at 3.4%. Workers in education are expected to see a lower-than-average increase in salary at 2.6% and transportation services workers at 2.8%.

The data comes from Aon’s “2018 US Salary Increase Survey” and included 1,026 US companies.

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