By Jonnelle Marte
Many Wall Street workers may not have gotten fat bonuses last year, but the financial sector wasn’t the only one with stale wage growth.
Total compensation at banks, including bonuses, is likely to be the lowest since 2008, with many companies feeling the pressure to revise compensation downward to keep shareholders happy, according to a report in the Wall Street Journal today. But some of the uncertainties leading to pay cuts in banking are also limiting raises or freezing salaries in many other industries, such as retail, health care and education.
In a tumultuous year marked by concerns of a financial crisis in Europe, a volatile stock market and a credit rating downgrade of the U.S., it makes sense that many business owners are hesitant to ramp up pay, analysts say. Overall, the average salary increase in 2011 was about 3%, flat from a year earlier, according to consulting firm Towers Watson. “It’s still a very uncertain economy,” says Steve Gross, senior partner at human resources consulting firm Mercer.
And many businesses gave out no raises at all. Education was the hardest hit, with 11% of educational institutions freezing salaries in 2011 according to Mercer. Then came banking with 5.8%, and lawyers and accountants at 5.4%. Only one sector — the oil and gas industry — had an above-average salary increase of 4.4% because of increased competition for skilled workers, higher oil prices and growth of the energy industry, says Gross.
There may be some other good news in the new data, however, says Gross: Only about 3% of companies froze wages in 2011, down from roughly a third of companies that held wages steady in 2009.