Dive Brief:

• Amid ongoing churn in the U.S. labor market as well as inflation in the broader economy, employers continue to build salary increases into their compensation budgets, according to a recent poll of compensation professionals by WorldatWork.
• The HR management association's more than 200 respondents reported an average salary budget increase of 4% at their organizations, or a median 5%, in 2021. These figures sit below the 5% average, or 6% median, increase that respondents said they would need to retain and attract talent, WorldatWork said. But they exceed the average of 3.3% and median of 3% planned budget increases for 2022 that the organization recorded in a separate survey of CEOs, CFOs and HR professionals.
• Despite more than half of respondents to the compensation professional poll stating that they had increased their organizations' salary budgets in the past six months, 71% said attracting and retaining talent was "somewhat difficult" and 23% said it was "very difficult."

Dive Insight:

All signs point to higher compensation budgets in 2022 for the vast majority of employers. XpertHR's November survey of employers bore similar results to WorldatWork's research; the company found employers planned salary budget increases of 3% this year, with retention, recruitment and economic factors commonly cited to explain the trend.

Earlier 2021 research by advisory firm Willis Towers Watson revealed employers particularly had sought pay increases for those at the executive level, with comparatively smaller increases for management, professional employees and support staff. Across sectors Willis Towers Watson found employees in technology and pharmaceuticals were in line for the largest 2022 pay increases, while those in oil and gas or leisure and hospitality were set for the lowest increases.

Overall, the news may in part represent the reversal of currents impacting U.S. workplaces during the first year of the pandemic, when 45% of employers in a November 2020 Gallagher survey reported that COVID-19 had disrupted their salary increase plans. However — as WorldatWork's researchers noted — 2022's planned increases might not keep pace with inflation, according to a report published in December by HR consulting firm Mercer.

Then there is the worker sentiment piece of the puzzle. Even at the height of the Great Resignation last autumn, nearly half of U.S. workers surveyed by Robert Half between March and April of 2021 said they believed they were earning less than they deserved. Though younger workers and women were the respondent demographics most likely to say they felt underpaid, according to Robert Half, 31% of all respondents said they would consider quitting their jobs by the end of 2021 if they did not receive a raise.

While pay increases land at the top of employee asks in some research, HR teams may need to take a broader perspective at the benefits space in order to gain an advantage in attracting talent. Sources recently told HR Dive about the importance of focusing on topics such as flexibility, caregiver support and mental health throughout 2022.