Why Big Salary Raises May Be Gone for Good

Why Big Salary Raises May Be Gone for Good

Businesswoman pulling rope
iStockphoto
By Millie Dent

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 Surprising Reason for the Boom in Snack Sales

Potato Chips
Wikimedia Commons/Evan-Armos
By Beth Braverman

Americans are increasingly dining alone, and they’re opting for snacks rather than full meals, according to a new report from NPD group.

A key driver of the trend is the growing number of single-person households, since solo eaters are more likely to opt for snack foods for dinner. Nearly a quarter of all snack foods consumed last year were consumed at mealtime.

“Smaller household sizes and eating alone are among the growing factors with snacking,” NPD food and beverage industry analyst Darren Seifer said in a statement. “Food manufacturers should think about the unique needs of the solo consumer when developing products and packaging, and marketing messages should be crafted to be relevant to them and their snacking behaviors.”

Related: The 12 Hottest Food Trends for 2015

A separate report released by Nielsen last year found that more than half of global diners had selected snacks in the past 30 days to replace a lunch, 48 percent had snacked for breakfast and 41 percent had snacked for dinner.

When making their selection, single diners prefer single-serve packages and are increasingly turning to “better-for-you” snacks, like fresh fruit, breakfast bars, and yogurt, NPD found.

Food manufacturers are starting to adapt to the demand for healthier options. In June, General Mills said it would stop using artificial colors and flavors by 2016, and Kellogg Co. has vowed to do so by 2018.

Even as demand grows for healthier snacks, the most popular snacks in North Americans might make a nutritionist cringe. Nielsen found that the most popular snacks were chips, followed by chocolate and cheese.

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Obamacare Drives Uninsured Rate to Record Low

REUTERS/Kevin Lamarque
By Millie Dent

With the number of Americans lacking health insurance in decline, the rate of uninsured Americans has hit a record low, reaching levels not seen since the National Center for Disease Statistics began keeping records in 1972.

In the first quarter of 2015, 9.2 percent of all Americans were uninsured, according to new data from the Center for Disease Control and Prevention, down from 11.5 percent in 2014. The total number of uninsured Americans fell by 7 million over the past year, from 36 million in 2014 to 29 million in the first three months of 2015.

The largest declines were seen among adults who were poor or near-poor, suggesting that the Affordable Care Act was responsible for the most significant gains in coverage. Both groups dropped from uninsured rates near 50 percent in 2010 to 28 percent among poor adults and 23.8 percent among near-poor adults in 2015.

While Democrats are citing data as evidence that the Affordable Care Act is working, Republicans will likely argue that the reduction is being driven by an improving economy and a steadily declining unemployment rate. 

Arkansas and Kentucky continue to record the most noticeable reductions in uninsured rates since Obamacare took effect at the beginning of 2013, according to a new report by Gallup. Texas is the only state to still have an uninsured rate higher than 20 percent. 

We Built a $335 Million Power Plant in Afghanistan that Can Barely Turn on Lightbulb

Ohm! What a Good Idea!
REUTERS/Regis Duvignau
By Millie Dent

USAID is denying that a $335 million “vital component” of their mission to aid the massive energy deficit in Kabul, Afghanistan is an utter failure, but a new report contradicts that claim.

A power plant built by U.S. Agency for International Development (USAID) is extremely underused and in danger of being wasted, according to the Special Inspector General for Afghanistan Reconstruction (SIGAR). USAID attempted to defend itself by saying the plant was only built to provide occasional backup and insurance for Kabul’s electrical grid, not for electrical power on a continuous basis. SIGAR’s report provides evidence that the plant was built for regular usage.

Related: U.S. Military Builds a $15 Million Warehouse That Nobody Wants 

First, the basis of design was for a base load plant, built to operate 24 hours per day, 7 days a week. Also, the plant hasn’t made any impact on reducing Kabul’s massive energy deficit that USAID says is one of the plant’s main priorities. Not only is it not being used regularly, but it’s not even contributing additional electricity to increase the overall power supply in Kabul. 

The Tarakhil Power Plant was built in July 2007 on the outskirts of Kabul, with the intention of supplying 18 diesel engines worth of operating power. Since Da Afghanistan Breshna Sherkat (DABS) – Afghanistan’s national power utility – assumed responsibility for the operation and maintenance of the facility in 2010, the plant has only performed at a shred of its total capability. Between July 2010 and December 2013, the USAID IG found that the plant performed at a mere 2.2 percent of its potential. 

Since the Tarakhil Power Plant was used incorrectly and only on an intermittent basis, the plant has suffered premature wear and tear on its engine and electrical components. The damage is expected to raise already steep operation and maintenance costs. 

Top Reads from the Fiscal Times:

We Built a $335 Million Power Plant in Afghanistan that Can Barely Turn on Lightbulb

Ohm! What a Good Idea!
REUTERS/Regis Duvignau
By Millie Dent

USAID is denying that a $335 million “vital component” of their mission to aid the massive energy deficit in Kabul, Afghanistan is an utter failure, but a new report contradicts that claim.

A power plant built by U.S. Agency for International Development (USAID) is extremely underused and in danger of being wasted, according to the Special Inspector General for Afghanistan Reconstruction (SIGAR). USAID attempted to defend itself by saying the plant was only built to provide occasional backup and insurance for Kabul’s electrical grid, not for electrical power on a continuous basis. SIGAR’s report provides evidence that the plant was built for regular usage.

Related: U.S. Military Builds a $15 Million Warehouse That Nobody Wants 

First, the basis of design was for a base load plant, built to operate 24 hours per day, 7 days a week. Also, the plant hasn’t made any impact on reducing Kabul’s massive energy deficit that USAID says is one of the plant’s main priorities. Not only is it not being used regularly, but it’s not even contributing additional electricity to increase the overall power supply in Kabul. 

The Tarakhil Power Plant was built in July 2007 on the outskirts of Kabul, with the intention of supplying 18 diesel engines worth of operating power. Since Da Afghanistan Breshna Sherkat (DABS) – Afghanistan’s national power utility – assumed responsibility for the operation and maintenance of the facility in 2010, the plant has only performed at a shred of its total capability. Between July 2010 and December 2013, the USAID IG found that the plant performed at a mere 2.2 percent of its potential. 

Since the Tarakhil Power Plant was used incorrectly and only on an intermittent basis, the plant has suffered premature wear and tear on its engine and electrical components. The damage is expected to raise already steep operation and maintenance costs. 

How Good Is Your Insurance? ‘Cadillac Tax’ Looms for Large Employer Health Plans

iStockphoto/The Fiscal Times
By Beth Braverman

While most companies expect health care cost increases to hold steady next year, nearly half of large employers say that if they can’t find new ways to cut costs, they’re going to cross the “Cadillac tax” threshold in 2018, according to a new study by the National Business Group on Health.

Passed as part of the Affordable Care Act and going into effect in 2018, the Cadillac tax will hit employers whose plans cost more than $10,200 for an individual or $27,500 for a family. The employer will have to pay a 40 percent tax on the cost of each plan above those levels.

Among the companies surveyed, 48 percent said that at least one of their benefit plans would trigger the Cadillac Tax. By 2020, 72 percent of employers say one of their plans will trigger the tax, and 51 percent say their most popular plan will be subject to the tax.

Related: Obamacare’s Cadillac Tax Hits the College Campus

“The need to control rising health care benefits costs has never been greater,” NGBH President and CEO Brian Marcotte said in a statement. “Rising costs have plagued employers for many years and now the looming excise tax is adding pressure.”

Employers expect keep benefit costs increases to 5 percent this year by pushing more costs onto workers via consumer-directed health plans (76 percent) and expanding wellness initiatives (70 percent).

None of the 425 employers surveyed said they planned to eliminate their health care coverage, but nearly a quarter said they’d consider offering employees a private exchange.

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