Understanding salary trends is crucial for both job seekers and employers navigating a dynamic labor market. This article explores the key factors driving wage changes, including inflation and industry demands. Staying informed of these 2024 compensation trends can help you make strategic career or business decisions this year.
US Salary Trends
1. Actual salary increase is 0.2% lower than the projected increase
In Q4 2023, the annual merit increase budget was projected at 3.3% and the average total increase budget was 3.8%. However, it was reported in March 2024 that the average merit increase was 3.3% and the total salary increase was 3.6%.
While the 2024 wage increase might be disappointing, things are looking up in 2025. A recent survey by the Conference Board revealed that “elevated wages are expected to continue” next year. With this new development, experts advise employers to adjust their compensation strategies, specifically a performance-based initiative, which is not tied to the base pay.
(Mercer, 2024)
2. Employers are promoting only 8% of employees
Compared to 2023 where 10.3% of workers received a promotion, employers say that they have promoted or are planning to promote fewer employees this year. That figure is around 8%, which is lower than the projected 9.3% projected in November 2023.
(Mercer, 2024)
3. The education sector has the biggest wage increase in Q2 2024
The recent Payscale Index showed that the education sector has a 5.9% year-on-year (YoY) growth rate and 1.3% quarter-to-quarter growth. The same report said that the increase is due to the high turnover rate and the increasing demand for teachers. On the other hand, the technology sector comes in last with a 4.1 YoY growth.
(Payscale, 2024)
4. Publishing and general maintenance jobs have highest wage increase
When it comes to salary rates by occupation, those that are in media or publishing received the highest year-on-year wage growth at 6.2%. Together in first place are those with installation, maintenance, and repair jobs. Meanwhile, accounting and finance jobs experience the least growth at 3.7%.
(Payscale, 2024)
5. The lowest wage people are willing to accept for a new job has increased
The average reservation wage (the lowest wage offer an individual would accept) jumped from $78,645 in July 2023 to $81,147 in July 2024. Although it increased, it is slightly lower than the figure conducted in March 2024 which was at $81,822.
This increase paints several scenarios. First, it could lead businesses to offer higher wages to attract and retain top talent. However, this can reduce profit margins, pushing them to invest more in automation or process improvements to reduce their reliance on labor. For small business owners, the increase would give them difficulty in filling positions, especially entry-level jobs, which could result in understaffing.
(Federal Reserve Bank of New York, 2024)
6. Average weekly earnings of private service providers saw around 3.4% YoY increase
As of this writing, the real average weekly wage of all employees increased by around 3.4% from September 2023 ($1,169.94) to September 2024($1,209.31). Additionally, the consumer price index for all urban consumers decreased by 1.3% from September 2023 to 2024.
(BLS – Current and Real Earnings for All Employees, 2024)
Salary Deflation
7. Wage growth has outpaced price growth for 15 months in a row
While salaries have increased by 4.2%, inflation also rose by 3.3%, showing a 0.9% real wage increase over this period. Thus, while the product prices are still rising, consumers can still afford them. Meanwhile, some products saw a decrease in prices. These include gas and groceries.
Given that consumers still have the purchasing power due to real wage growth, small businesses should consider modest price increases on non-essential products or premium offerings while keeping necessities competitively priced. With decreased costs in gas and groceries, businesses could also explore expanding delivery services or food-related offerings.
(The White House, 2024)
8. The US is experiencing disinflation, not deflation
Disinflation is when the price of consumer goods are rising but at a slower pace. This can have mixed effects on businesses. While disinflation can lead to more stable prices and potentially lower costs for raw materials, it may also reduce the pricing power of a business. In other words, they will have a hard time raising their prices because doing so could mean losing customers to the competition. Additionally, disinflation might also lead to reduced consumer spending as people delay purchases, expecting that prices may fall even further.
(CNBC – Deflation vs Disinflation, 2024)
Salary Transparency
9. 12 more states are passing pay transparency laws
Several states have passed pay transparency laws over the years, requiring employers to disclose employee compensation either publicly or to the employees themselves. Colorado was the first one to do this in 2019 and the latest was Vermont (effective July 1, 2025).
These new laws might be overwhelming and confusing to businesses. To ensure compliance, businesses should review job descriptions, salary ranges, and pay structures. They should also train managers and HR staff on new requirements, and develop clear communication strategies around pay. Also, complying with payroll law is easier by using software solutions, like compensation management software or HR and payroll systems with compliance features.
(CNBC – States with Pay Transparency Laws, 2024)
Total Compensation and Benefits
10. Healthcare workers have the highest total employer compensation cost
As of June 2024, healthcare workers, along with the social assistance industry, have the highest total employer cost for employee compensation, averaging $67.64 per hour. Meanwhile, state and local workers were at $61.37 per hour. Meanwhile, private industry workers were at $43.94 per hour and civilian workers at $46.21 per hour. The total compensation cost includes wages/salaries and benefits.
The total benefits cost consists of five categories:
- Paid leave
- Supplemental pay
- Insurance
- Retirement and savings
- Government-mandated benefits (i.e. Social Security, Medicare, etc.)
(BLS – Employer Costs for Employee Compensation, 2024)
Bottom Line
These salary trends show that although salary increase is below the projected increase, it still outpaced price growth. And, despite this increase, workers require more as their financial needs also grow, which translates to additional costs for employers.
To manage these rising salary costs, small businesses can adopt new technologies or reorganize their workflows to boost productivity. Also consider offering non-monetary benefits that can be attractive to employees, such as flexible work schedules or professional development opportunities. Businesses can also implement a performance-based pay structure, which ties compensation more directly to individual and company performance, potentially motivating employees while giving business owners more flexibility in managing their overall salary costs.
