In 2021 and 2022, American workers hoping for a bigger paycheck had two powerful words at their disposal: I quit. During the Great Resignation, millions switched jobs for higher-paying ones — then sometimes, mere months into a new role, turned around and pounced on an even better-compensated opportunity. For job hoppers, the money was there for the taking.
Today, though, most of us are resigned to staying put. The hiring frenzy has cooled off, and the economic outlook is murky at best. The question is no longer: How much of a pay bump can I get by switching jobs? Now it's: How much of a raise can I expect in 2024 if I stay in my current job?
To get an early read on raises for next year, I looked at the latest employer surveys conducted by four leading providers of compensation data: WTW, Salary.com, WorldatWork, and Payscale. They found that employers are planning to increase their salary budgets by about 4% next year. That's actually down a bit from this year's average of about 4.3%. But with everything from car prices to grocery bills beginning to moderate, the Congressional Budget Office expects inflation to slow to 2.6% in 2024. That means workers could expect a net gain next year of about 1.4%.
Doesn't sound like much? Sure — but it may wind up being the biggest boost in purchasing power that workers have gotten in years. In 2021 and 2022, inflation ate into paychecks so much that the value of the average worker's wages — what they can actually buy with their money — tumbled all the way down to 2017 levels. Compared with that, an inflation-adjusted boost of 1.4% is a definite improvement — though not enough to make up for the pandemic-era declines. By the end of next year, workers still won't have worked their way back to the purchasing power they enjoyed in early 2020, when the value of their wages peaked.
"With inflation being where it's been over the last two years, it's been a roller coaster," says David Turetsky, a vice president of consulting at Salary.com. "We might see that some organizations are going to have to put more money back into market adjustments to be able to get their people to where they think they should be."
Of course, 4% is the average projection across the entire workforce. Raises will vary widely by geographic region, company size, seniority level — and, most of all, by industry. According to the Payscale survey, employees in education and healthcare can expect a pay bump of 3.5% or less, while workers at energy companies will enjoy raises of 4.5%.
The 4% raises are a bit of a surprise. If prices are moderating and the job market is cooling off, why aren't employers eagerly reverting to the annual raises of 3% that were the norm in the decade leading up to the pandemic? For starters, unemployment remains near a five-decade low — which means companies still have to pay a competitive wage if they want to hold on to their existing staff. What's more, new pay transparency laws in states like California and Washington are forcing employers to post salary ranges for every job opening — meaning their own employees can see if they're getting lowballed.
"We are still in a tight labor market," says Ruth Thomas, the chief product evangelist at Payscale. "Employees still have agency and power right now."
As always, most of that power is wielded by the top performers at a company: Superstars get rewarded more than quiet quitters. If you think you deserve a raise that's higher than the 4% average, pay experts have a few tips. First, ask for what you think you're worth. "Be open and communicative about your needs," says Turetsky of Salary.com. "Don't just take what's given to you." Second, make your request early — perhaps a few months before your annual review — while your boss still has some wiggle room in the budget. Third, check job listings to see what competitors are paying for comparable roles. And fourth, anchor your expectations to your industry's averages: A 7% raise will be a tougher sell for someone in education, say, than for someone in the energy sector.
These days, as the hiring frenzy subsides, you're not as likely to get a bigger raise simply by switching companies. But that doesn't mean you can't get a pay bump by switching jobs at your current company. "Look at your employer's careers page and see if there are opportunities that could open your horizon to a new pay range or new promotional opportunities," says Turetsky. "Sometimes pay isn't just about the job you do today and what skills you have right now — it's also about where you're going to go."
Above all, don't put off asking for a raise until 2025. Some economists expect the economy to take a dip next year — and if they turn out to be right, your boss may not have the money to give you a bigger raise, even if they agree you deserve one. "Businesses across the economy are trying to watch their cost structures," says Aaron Terrazas, chief economist at Glassdoor. "I think we are on the cusp of substantially slower wage growth across the economy." Which means that 2024 may be your last, best hope for landing an above-average raise — perhaps for years to come.
Aki Ito is a senior correspondent at Insider.