(Bloomberg) -- Despite a corporate tax cut, record low unemployment, and an accelerating economy, employers aren't planning big increases to their salary budgets for next year, a new survey from Willis Towers Watson finds.
In a survey of 814 organizations, the consulting firm found that, on average, employers plan on giving out 3.1 percent pay raises in 2019. That's an increase of about 0.1 percent from previous years. Before the recession, employers gave out 3.8 percent increases—since then, despite the improving economy, raises have hovered around 3 percent.
“Since 2008 we have been waiting” for employers to meaningfully raise wages, says Sandra McLellan, the North America Rewards practice leader at Willis Towers Watson. This year will not be that year. “It's not a radical change, it's a slight uptick,” she says.
The economic recovery has yet to hit workers' wallets. Unemployment continues to fall, and demand for labor is increasing, but employers are still not raising wages. In fact, American workers effectively got a pay cut this year: U.S. average hourly earnings adjusted for inflation fell 0.2 percent in July from a year earlier.
Economists have multiple theories about why wages haven't grown, despite all signs suggesting they should: decreased bargaining power for employees, low productivity, stock buybacks, globalization, and automation, to name a few.
Each year employers, for their part, tell the same story. “There really has just been a lot of cautiousness,” McLellan says. Employers say they're still scarred from the recession and worry about costs. “I think companies are under a lot of pressure in terms of managing their profitability and bottom line.”
President Trump said his administration's tax cut would push companies to put to more money in workers' pockets. But most companies haven't spent the $30 billion windfall on employees—at least not yet. Dividends, however, have soared to record highs, and S&P 500 companies are spending on the same things they did before the tax cuts.
To contact the editor responsible for this story: Joshua Petri at jpetri4@bloomberg.net
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