US employers more conservative with salary budgets as employee base stabilizes

Core Insights - Employers are adopting a more conservative approach to salary budgets, anticipating lower demand and aiming for long-term stability in their workforce following a period of high turnover [1][11] - The overall median pay raise for 2024 has decreased to 4.1%, down from 4.5% in 2023, with 47% of U.S. organizations reporting lower salary budgets compared to the previous year [11] - Companies are increasingly reviewing and updating their compensation programs, with over half (51%) conducting compensation reviews for specific groups and nearly half (49%) hiring at higher salaries [2][10] Salary Budget Trends - Overall salary budget increases are projected to rise by 3.9% in 2025, despite a decline since 2023 [5] - A significant majority (73%) of companies reported higher total payroll expenses compared to the previous year, which includes salaries, bonuses, variable pay, and benefits [9] Market Conditions and Employee Needs - Organizations are responding to current market conditions by enhancing workplace flexibility and improving the employee experience, with 52% of companies focusing on these areas [13] - Employers are taking a holistic approach to reward programs, considering bonuses, long-term incentives, and health benefits, while also emphasizing pay equity and the connection between salary increases and business performance [10]