U.S. employers adjust projections for 2001 salary increase

Despite talk of an economic slowdown, U.S. employers are planning to give slightly higher pay raises to employees this year than they originally projected in July 2000, according to a survey by human resource consultant William M. Mercer Inc.

The 2000-2001 U.S. Compensation Planning Survey, conducted among 2,439 firms nationwide, showed that employers planned base salary increases of 3.9 percent to 4.4 percent in 2001 for various employee groups.

In an update of the annual survey conducted in December 2000 among 645 firms, employers indicated that they now expect to grant pay increases of 4.2 percent to 4.6 percent to employees in 2001. The biggest projection increase was for technical and professional employees.

"Employers are adopting a wait and see' attitude regarding the economy," according to Spencer Fields, senior consultant and client manager in Mercer's Kansas City office. "The labor market is still so tight that they are reluctant to take any steps that would make it more difficult to attract and retain good talent, In fact, the survey shows just the opposite, that they are doing more to position themselves positively with current and prospective employees."

Only 15 percent of the surveyed employers anticipate a reduction in staffing levels this year; 44 percent predict no change and 41 percent expect to increase organizational headcount in the next year.

"Keep in mind that 2001 incentive payout levels reflect 2000 corporate performance, which generally was good," said Fields. "Looking ahead to incentive payouts in 2002 now that could be another story."

William M. Mercer Inc. assists employers in human resource strategy. Based in New York and with offices in more than 40 U.S. cities, the firm is the U.S. operating company of William M. Mercer Companies LLC.