3% Base Salary Increases Expected to Continue in 2018

  • Posted by: J. Kent Gervasini |
  • 8/27/17 |
  • 12:00 AM
3% Base Salary Increases Expected to Continue in 2018


Hay Group division of Korn Ferry (NYSE;KFY)

Mountain States Employers Council

For the seventh year in a row, according to new research released by the Hay Group, a division of Korn Ferry (NYSE:KFY), U.S. employers can expect to see a 3 percent median base salary increase in 2018. Despite economic recovery, albeit a slow recovery, salary budget growth remains modest.

Employers in 2017 Live in a New Base Salary Reality
               – The Great Recession of 2008 Not Far from Mind
There is also consistency across most industries and employee groups, with companies indicating a 3 percent median increase across the board. Since the end of the recession, the three percent increase reflects employers’ conservative attitude toward base salary increases. “I’m not surprised we are once again seeing a 3 percent base salary increase this year,” said Maryam Morse, North American Rewards and Benefits Leader, Korn Ferry Hay Group. “It reflects our new pay reality that substantial pay growth isn’t a given.”

Short and Long-Term Incentive Plans Evolve – No Large, Across the Board Salary Increases
“Companies are continuing to evolve how they reward employees. They are relying more on short and long-term incentive plans and financial recognition programs versus simply providing larger annual increases across the board,” said Morse. “The key is for organizations to ensure they are optimizing their reward investment to drive performance and retain their best employees.”

“While the 3 percent salary increase number has become the norm, that doesn’t mean that top performers won’t be rewarded, which is critical in this tight labor market,” added Morse. “These individuals often receive two times the median salary increases of other employees."

Pay Increase Projections for 2018 
 –  A Survey Conducted by Mountain States Employers Council (MSEC)
MSEC asked 491 organizations around the state what they plan to pay the average employee in 2017 and 2018, then compared that wage to what employers actually paid workers in 2016. Here are the projected pay increases average workers can anticipate being added to their base wages in 2018.

Mountain States Employers Council Survey
All Colorado 3.0 %
Denver / Boulder 3.1 %
Northern Colorado* 3.2 %
Southern Colorado 3.0 %
Western Slope 2.4%
Resort Areas 3.2%
*Employers in northern Colorado plan to raise average wages about 3.2 percent next year, one of the largest percentage increases in the state

Denver Wage History  

1977 - 2001
From 1977 through 2001, metro Denver employers consistently passed on wage increases of 4 percent or higher every year except for 1995, when increases averaged 3.9 percent. After the tech bust in 2001, increases slowed but were consistently above 3 percent.

2008 (After the Great Recession) – Current
That all changed after the financial crisis in the Fall of 2008, which sent the global economy into a tailspin. From 2009 on, pay raises have remained under 3 percent, although in 2016 they reached 2.9 percent, the amount of increase expected for 2017, up from an initial forecast last year of 2.8 percent.

Interesting Observations

Denver and Colorado are Booming, but 
 Salary Budget Growth Remains Modest

Colorado's unemployment rate is one of the lowest in the country at 2.3 percent;
the lowest rate in more than 20 years.  

June 8, 2017 blog, “Reality Check – Denver Employers are Struggling to Hire”, and

Recruiting cost line items, on your company’s monthly financial statement, are now more frequently under discussion.


The Information Provided Does Not Constitute Legal Advice
J. Kent Staffing is a Denver temporary staffing agency and Direct Hire recruiting firm.  
The company has a world-wide audience.  Employment laws and regulations vary from state to state
and country to country.  Therefore, employers, temporary staffing agencies, and direct hire recruiting
firms should consult their own labor or employment law attorneys with additional questions or
for guidance and more information specific to their country, state and workplace.


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