Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging

Despite a corporate tax cut, record low unemployment, and an accelerating economy, employers aren’t planning big increases to their salary budgets for next year, a new survey from Willis Towers Watson finds. In a survey of 814 organizations, the consulting firm found that, on average, employers plan on giving out 3.1 percent pay raises in 2019. That’s an increase of about 0.1 percent from previous years. Before the recession, employers gave out 3.8 percent increases—since then, despite the improving economy, raises have hovered around 3 percent. “Since 2008 we have been waiting” for employers to meaningfully raise wages, says Sandra McLellan, the North America Rewards practice leader at Willis Towers Watson. This year will not be that year. “It’s not a radical change, it’s a slight uptick,” she says. President Trump said his administration’s tax cut would push companies to put to more money in workers’ pockets. But most companies haven’t spent the $30 billion windfall on employees—at least not yet. Dividends, however, have soared to record highs, and S&P 500 companies are spending on the same things they did before the tax cuts. 

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The guys at the top need not worry...

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No mention of the changing demographics in the work force. Older workers and their higher wages retiring, younger workers and their lower wages entering.  I would like to see this projection in research like this...

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In same time: "Congressional auditors say about 30 million people — 21 percent of U.S. taxpayers — will have to come up with more money to pay their 2018 taxes next year because their employers withheld too little from their paychecks under government tables keyed to the new tax law. About 30 million workers received pay that was “under-withheld” — making their paychecks bigger this year but bringing a larger bill at tax time next spring, according to the Government Accountability Office’s report. About 27 million taxpayers would have been affected even if the new law hadn’t been enacted. The changes, however, added an estimated 3 million to that number...."

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(edited)

31 minutes ago, damirUSBiH said:

According to new study from Pew Research,  Americans's peychecks are bigger than 40 years ago, but their purchasing power has hardly budget.

http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

image.png.242229acc6f28ad928f3bfc78ac830ad.png

 

In Vermont, there are some 317,000 wage-earners.  Of that, 76,000 are paid minimum wage.  That is currently at ten bucks. 

Judging by Damir's chart, above, that indicates that real wages for workmen in Vermont have dropped by 50% since 1964, at least for those 76,000  (or roughly 25% of the population).  Meanwhile, the median wage in Vermont is $14.42/hour, which is a long way from $22.65.  It is the rural States that have taken it on the chin in the last five decades. 

How anybody can still afford gasoline at those income levels remains a mystery to me.  I think bicycles are going to make a comeback. 

Edited by Jan van Eck
typing error
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56 minutes ago, 50 shades of black said:

Despite a corporate tax cut, record low unemployment, and an accelerating economy, employers aren’t planning big increases to their salary budgets for next year, a new survey from Willis Towers Watson finds. In a survey of 814 organizations, the consulting firm found that, on average, employers plan on giving out 3.1 percent pay raises in 2019. That’s an increase of about 0.1 percent from previous years. Before the recession, employers gave out 3.8 percent increases—since then, despite the improving economy, raises have hovered around 3 percent. “Since 2008 we have been waiting” for employers to meaningfully raise wages, says Sandra McLellan, the North America Rewards practice leader at Willis Towers Watson. This year will not be that year. “It’s not a radical change, it’s a slight uptick,” she says. President Trump said his administration’s tax cut would push companies to put to more money in workers’ pockets. But most companies haven’t spent the $30 billion windfall on employees—at least not yet. Dividends, however, have soared to record highs, and S&P 500 companies are spending on the same things they did before the tax cuts. 

That money went to fund stock buy backs and, therefor, more bonuses at the top.  I think Trump actually did want some money going to the working class.  I actually believe he wanted/wants to help them, whether it is for honest caring reasons or the fact that they are his base and he needs their votes.  Whatever.  I never expected that money to get to the floor.

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19 minutes ago, Dan Warnick said:

That money went to fund stock buy backs and, therefor, more bonuses at the top.  I think Trump actually did want some money going to the working class.  I actually believe he wanted/wants to help them, whether it is for honest caring reasons or the fact that they are his base and he needs their votes.  Whatever.  I never expected that money to get to the floor.

We have (as a society) recruited the wrong types of people to be CEO's of these major corporations. 

You had that fellow running Home Depot who was paid over $200 million a year. 

You had that fellow running Disney who was paid so much money even he could not count it. 

What on earth is wrong with these "Compensation Committees"? Have their minds stopped working? Or is it all the "other peoples' money" syndrome, as at the University of Connecticut, where the top pension - the pension, not the salary -for a staff member is now over $306,000 a year?  [Nice pension!]   Hey, somebody else is paying it, so why not?

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2 minutes ago, Jan van Eck said:

We have (as a society) recruited the wrong types of people to be CEO's of these major corporations. 

You had that fellow running Home Depot who was paid over $200 million a year. 

You had that fellow running Disney who was paid so much money even he could not count it. 

What on earth is wrong with these "Compensation Committees"? Have their minds stopped working? Or is it all the "other peoples' money" syndrome, as at the University of Connecticut, where the top pension - the pension, not the salary -for a staff member is now over $306,000 a year?  [Nice pension!]   Hey, somebody else is paying it, so why not?

It's worse than you think.  I have personally witnessed a number of CEOs playing musical chairs, switching companies every 1 to 2 years.  There are nowadays select CEO "symposiums" to help CEOs adjust to changing challenges with running today's companies.  Sounds productive, right?  But we can only imagine what these guys really talk about on these retreats, like how to retreat with the best compensation package while negotiating the next.  Also makes for a nice planning tool to have a network of people who talk to each other about everyone's exit dates.  At one company in Xxxxxxx we saw CEOs leave after 2 years at the most, 3 CEOs in 3.5 years!  All of them went away with glowing appraisals from the company, and all of them already with their next job lined up.  One of them, his claim to fame was that he had instituted a process where smokers had to fetch a pass off the wall of their work area to go out for a smoke, and then he did the math on the increased productivity, put it in the company newsletter and, POOF, he was gone with millions of Euros.  The game is rigged and the workers produce more for the same pay.

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(edited)

13 minutes ago, Dan Warnick said:

  The game is rigged and the workers produce more for the same pay.

Unfortunately, I think you will find that the workers produce more with less (inflation-adjusted) pay.  It would appear that real wages by purchasing power are actually declining.  

The situation in Vermont demonstrates the trend.  Although you have these small grocer outfits that historically pay minimum wages, that trend is spreading deep into established retail.  Then it starts pushing into small enterprises, including some manufacturing, and things like garbage collection, and road traffic-control crews, even shuttle-bus drivers.  The better wages remain with think jobs, such as accountants.

Interestingly, the "BigLaw" New York law firms are upping their pay for first-year associates, fresh out of the top tier Ivy League law schools.  Anyone coming out of Yale Law and going to New York is now offered $195,000 for his starter salary. That, of course, gets charged off to the big corporations that are the clients of BigLaw, and who hire BigLaw to prevent incursions into their wage discrimination and employment discrimination practices.  When you come out of Yale today, you are headed for a career of being a whore. 

To give you an illustration of how deep the minimum-wage structure is pushing into society, I point to the fellow  (baggage handler, apparently) at Horizon Air, a commuter contractor for Air Alaska, that took a Bombardier Q-400 propjet from the parking area at Seattle Airport, flew it around upstairs doing loops and rolls just outside the city of Tacoma, than nosed it into an island.  Scratch one $25 million dollar airplane.  His complaint to management was that he was being paid minimum wages. So he suicided himself - and their airplane. Happened last Friday. 

Edited by Jan van Eck
Added paragraph on Q-400
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The unemployment numbers are also very misleading as well.  People who would normally be in salary positions, are now counted in those minimum wage jobs, because those are the only jobs they can get.  Employment?  Yes it is, but it barely pays the bills, makes repaying student loans a big burden, does not include health care, and does not leave anything to set aside or invest for retirement.  It's tough out there, for sure.

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6 minutes ago, Dan Warnick said:

The unemployment numbers are also very misleading as well.  

The unemployment "numbers" are misleading in that they do not count the folks that have become discouraged and dropped out of the labour force. Those numbers are surprisingly high, at least 16% of the prime labor force, defined as males between the ages of 25 and 54. 

In Vermont, the labour drop-out rate (men who have given up on finding work) is measured by County, and ranges from a "low"  of 16% in Chittenden County, which includes the prosperous (relatively) city of Burlington, to 23% in poor Essex County.  Measured by towns, the ten towns with the least employment have 47% or more of the workforce unemployed.  What you end up with is deep, institutional poverty.

It doesn't have to be this way, of course.  What these communities need is investment capital - and not even a lot.  Instead, outside hustlers have come in, stolen (literally) investment funds - including the great scandal, buying the ski mountain  Jay Peak with stolen funds - and hustle the locals with solar deals and outrageous feed-in tariffs, to impoverish the next two generations of locals with crushing electricity rates.  The hustlers need to be put in jail.   And then Americans expansively need to get serious about rural poverty, because that is the precursor of the destruction of the American society.  And, in all candor, that would be a real shame. 

Raid and scoop up those Wall Street Bankers, put them on a US Marshal's plane to Guantanamo in chains, and let them eat breakfast with the mujaheddin. That should give them a bit of perspective on their CEO pay ideas. 

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5 hours ago, pinto said:

No mention of the changing demographics in the work force. Older workers and their higher wages retiring, younger workers and their lower wages entering.  I would like to see this projection in research like this...

Slavery has been replaced by H1B. And they come voluntarily!

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Wouldn't that give a rise to Marxist ideas again?

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On 8/15/2018 at 8:33 AM, damirUSBiH said:

According to new study from Pew Research,  Americans's peychecks are bigger than 40 years ago, but their purchasing power has hardly budget.

http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

image.png.242229acc6f28ad928f3bfc78ac830ad.png

 

And the educational level is far higher. I don't have the figures but would guess two to three times as many college graduates and above. Many were unemployed awhile after graduation and never used their major at all. Many paid more for their education and time than they ever made up. Our educational system is designed for and by educators to keep them employed, highly paid, and to allow them benefits and retirement as high as possible. Also to allow their leftist views to keep leftists in charge both from union dues and negotiations. Teaching marketable skills is often not a major consideration IMHO. It is a valuable graph you have posted.

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