Why Big Salary Raises May Be Gone for Good
If you’re hoping for a big raise this year, prepare to be disappointed. Sure, you might be among the lucky people who get a healthy bump in salary, but a recent survey by professional services firm Towers Watson found that companies are planning pay raises of 3 percent on average for workers.
A new survey by human resources and management consultancy Aon Hewitt confirms that forecast: Even as the job market continues to improve, salaried employees can expect their base pay to increase 3 percent, or about a percentage point smaller than the raises employers were handing out 20 years ago.
Related: Full Employment Alone Won’t Solve Problem of Stagnating Wages
From 1996 through 2000, salaries went up by about 4.1 percent a year, according to Aon Hewitt data. From 2011 through 2015, annual raises have averaged about 2.8 percent. And even as we get further away from the recession, that downward shift appears to be permanent, as companies look to keep a lid on their fixed costs.
"The modest increases we've seen over the past 20 years are an indication that employers have changed their compensation strategies for good, and we shouldn't expect to see salary increases revert back to 4 percent or higher levels that were commonplace in the past," said Aon Hewitt’s Ken Abosch.
Related: Obama Moves Toward Executive Action on Overtime Pay
On the bright side, at least for some workers, employers are planning on doling out more money in the form of bonuses, cash awards and other so-called variable pay. Aon Hewitt’s survey found that workers will see their variable pay rise by 12.9 percent this year.
That shift favors higher-level white-collar workers, since companies have been cutting back on bonus and incentive pay for clerical or technical workers. In 2011, only 43 percent of companies gave bonuses or other cash incentives to those hourly workers eligible for overtime pay, down from 61 percent in 2009, according to data Aon Hewitt shared with The Washington Post. On the other hand, 93 percent of companies offer incentive programs to employees with a fixed salary.
As Abosch told the Post: “It’s the haves and the have nots.”
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The Obamacare Mandate That Could Produce $12 Billion in Fines in 2018
Republicans effectively eliminated the individual Obamacare mandate in the tax package signed late last year. Although the new regulation reducing the mandate penalty to zero doesn’t take effect until 2019, President Trump has cited the rule change as a victory over the health law so many conservatives oppose. “Essentially, we are getting rid of Obamacare. Some people would say, essentially, we have gotten rid of it," Trump told a crowd in Michigan two weeks ago.
However, many parts of the Affordable Care Act are still in effect and will continue to operate even after the individual mandate is eliminated in 2019.
In particular, the employer mandate, which requires companies with more than 50 employees to offer health benefits or face fine of roughly $2,000 per worker, will continue to play a significant role in the Obamacare system. The Congressional Budget Office estimates that the mandate will produce more than $12 billion in fines in 2018 alone.
Some conservative groups are pushing lawmakers to stop enforcing the employer mandate, but the IRS is still working to enforce the law. According to The New York Times Monday, the IRS is sending out notices to more than 30,000 businesses that have failed to comply.
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A West Palm Beach doctor who is friends with Ike Perlmutter, the chairman of Marvel Entertainment and an informal adviser to President Trump on veterans’ issues, has held up “the biggest health information technology project in history — the transformation of the VA’s digital records system,” Politico’s Arthur Allen reports. Dr. Bruce Moskowitz “objected to the $16 billion Department of Veterans Affairs project because he doesn’t like the Cerner Corp. software he uses at two Florida hospitals, according to four former and current senior VA officials. Cerner technology is a cornerstone of the VA project. … Moskowitz’s concerns effectively delayed the agreement for months, the sources said.” Read the full story.