Large corporations are biting the bullet this summer and giving raises to retain their employees—and help them cope with inflation.
The average pay raise is around 3% a year, typically given between January and April. But soaring inflation, high gas prices, and a tight labor market are creating conditions that warrant off-cycle and larger-than-usual bumps in pay for workers.
A June survey from Pearl Meyer, which advises employers on compensation, found that in 2022, companies increased worker pay by an average of 4.8%. The higher-than-usual increase was driven by a "perfect storm of record inflation, high turnover rates, and a shortage of labor," the survey concluded.
About one-third of organizations surveyed by Pearl Meyer said they are considering or planning rarely used mid-year raises for top performers.
"It's surprising because historically it has been pretty rare to see mid-year salary increases," said Rebecca Toman, vice president of surveys for Pearl Meyer.
Toman predicted that mid-year raises will be awarded to top performers and mission-critical employees only. "We are going to see mid-year raises, but not everybody is going to be eligible."
Most organizations surveyed said the higher increases in 2022 were brought on by retention concerns and the higher cost of living amid rising inflation.
"Inflation is definitely an issue right now but there are also labor shortages and insufficient talent in many areas," Toman said.