Merit raises average 3 percent, but expected to go higher

An annual survey of wages in Michigan puts this year’s average merit raise at 3 percent, about what it was last year, but shows a slight increase in what companies are offering in bonuses, up to 10.35 percent of base salary, compared to 9.5 percent.

Three percent seems to be on “the low side,” given an increasing need to keep good workers, especially since bonus pay is up only slightly, but is likely to go up as the labor market improves, ASE’s president and CEO Mary Corrado said.

They results also may indicate a shift from pay raises to bonuses to reward work performance.

The results, compiled by the American Society of Employers in Livonia, are set to be released Tuesday at the group’s compensation and benefits conference at Schoolcraft College.

“If I was to predict, I’d say that next year we’re going to see those merit increase a little bit higher,” Corrado said. “Companies are using the term merit increase of 3 percent. Can you really determine a person’s performance on 3 percent?”

ASE surveyed 352 companies online, a little more than half were in metro Detroit. About a third of the respondents were classified as automotive suppliers, and almost one-fifth were nonprofit organizations.

While the survey was taken in January, the data really is for 2014.

The merit pay increase, Corrado said, seems to have become a general increase, and bonuses — which are a one-time boost — are being used to reward outstanding performance.

“I think,” Corrado said, “companies will continue to move more towards variable compensation and the variable compensation amount is probably going to increase faster than a merit increase would.”

Factors that are keeping wages low include lingering fears about the state’s deep recession, low inflation, pent-up wage cuts, and the number of people still looking for work, and globalization and technology, the survey report concluded.

Still, she said, employers will “need to take an in-depth look not only at their wage and benefit levels, but their overall menu of reward practices to determine if they are remaining competitive.”

Here is the break down of wage increases by job groups:

  • Design, drafting, 5 percent
  • Engineering, project management, 4.4 percent
  • Sales, marketing, 3.6 percent
  • Accounting, financial, 3.3 percent
  • Human resources, 3.1 percent
  • Information systems, 2.9 percent
  • Engineering, 2.9 percent
  • Engineering management 2.3 percent
  • Plant management, 2.1 percent
  • Assembler, production, 1.8 percent
  • Administrative, 1.5 percent
  • Medical, 1 percent
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Posted by Tribune News Services

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