The economy's bouncing back. The stock market keeps hitting new records. And the jobless rate in Florida may soon drop below 4 percent. Surely, these are robust indicators — key signs that an annual raise is just around the corner. Right?
Allow me to offer this insight: Bwahahaha.
Traditional markers may signal a raise is due. But not in the 21st century business world. In its 41st annual survey asking more than a thousand businesses for pay trends, consultants Aon Hewitt found that companies plan to keep budgets for raises relatively flat in 2018.
There are multiple reasons for little change in pay. They range from weak productivity (why pay more for less output?) and super-low inflation (if prices are flat, why give raises?) to corporate habits honed during the recession (if raises were rare during the sharp downturn, why revive them now?).
Here's another reason — cited by Aon Hewitt in its new "U.S. Salary Increase Survey" — that may be more concerning: "A more pessimistic view of corporate performance in the coming year."
Come on, Corporate America. Don't yank away the economic punch bowl so quickly. We're still smarting from the worst recession in our lifetimes.
The good news is high performers are the exception and may yet win a bump in pay next year, Aon Hewitt says. Companies are keen to keep top workers happy, with an average 12.5 percent of payroll going to incentive and bonus pay in 2018.
The bad news for so called under-performers is the tradition of getting, say, a perfunctory 3 percent annual raise may soon become extinct. Companies that stopped annual raises during the recession now realize they can still get away with it without losing many workers. That's a powerful cost control tool employers do not want to give up soon.
Economists have long predicted for years that low unemployment rates will force expanding companies to raise their pay in order to woo skilled labor from jobs at other businesses. Except it's not happening, at least not yet.
Why is there so little backlash against flat paychecks? One reason is, overall, Americans are feeling pretty good these days about their standard living. In fact, says the latest Gallup poll, Americans are as bullish on their living standards as they have been at any time in the past decade.
The percentage of Americans saying their standard of living is getting better has risen to 64 percent so far this year from 62 percent in 2016. There's a corresponding drop, from 22 to 19 percent, who say their living standard is getting worse.
This is not the result of wishful thinking. American households are enjoying some of the strongest sustained income growth in many years. Median U.S. household income last year was $59,039, up an inflation-adjusted 3.2 percent from a year earlier. That's a new high, finally surpassing the previous record in 1999.
As long as such household euphoria lasts, few may care (too much) if a raise is not in their immediate future.
Contact Robert Trigaux at [email protected] Follow @venturetampabay.