Career Spotlight: Jobs plentiful, raises not
Workers ought to feel fairly secure these days. Even though the unemployment rate ticked up a bit recently, to 5.1 percent, that's on the heels of jobs lost to Hurricane Katrina. New jobs are coming online in many sectors, a pretty rosy scenario compared with the rough spots of previous years.
So, with little slack in the job market, fatter paychecks ought to be close behind, right? Not this time. Salary increases have yet to bounce back in proportion to the strength of the overall market. And two recent surveys indicate that wages will rise only moderately in the coming months. Publishing company BNA's Wage Trend Indicator, which tracks private salaries and wages on a quarterly basis, predicts only a slight rise in third-quarter pay. More disheartening news comes from a recent survey by Mercer Human Resource Consulting, which projects average salaries to exceed inflation by only 1 percent in 2006, less than the 2.4 percent worldwide.
Why the discrepancy? "Growth economies will always have more robust pay than mature economies," says Steven Gross of Mercer. In developing countries, he explains, wage growth often expands faster than the quality of labor. That's the case in India, for example, whose workers will receive a 7.3 percent pay raise.
The opposite is true at home in the United States. While there's plenty of anecdotal evidence of job vacancies and frustrated hiring managers, some experts caution that there are still more job seekers than jobs. People who stopped looking for work during the recession and "jobless recovery" earlier this decade are looking for work again, buoyed by encouraging economic news. They expand the labor pool. Many companies, meanwhile, are still abiding by the fiscal prudence adopted in tougher times. "Companies feel under such cost squeezes that they are looking at other alternatives than raising wages," says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School. That means holding a vacant position longer, for example, to wait for a more experienced candidate who won't require expensive training, or filling open jobs with less expensive, younger workers.
There are other ways to plump a paycheck, however. "Companies are very reticent about pay increases," say Gross, "but they are more comfortable with incentives." Unlike fixed salaries, sign-up bonuses and cash awards can dip up and down with the economy. That's a trend catching on among some employers: In another survey by Mercer earlier this summer, 55 percent of companies said they planned to offer cash awards and signing bonuses to employees and recent hires. Now that's something we can all take to the bank.
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