Forecasted 2014 US base salary increases remain stable, while employees see net gains, new Hay Group research finds

PHILADELPHIA--(BUSINESS WIRE)--US employees can expect median base salary increases of 3.0% in 2014, according to new research released by Hay Group, a global management consulting firm. These increases are consistent with forecasted base salary increases reported for the last three years. After factoring in annualized consumer price index growth at 1.4%, the resulting pay movement for 2014 will be a net gain of 1.6%. This compares to a 0.8% net gain for employees in 2013.

“These salary increase projections reflect cautious optimism as the US economy gets healthier and unemployment rates continue to decline,” said Tom McMullen, Hay Group’s North American Reward Practice Leader. “Employers continue to walk a fine line between keeping a reign on their fixed base salary and benefits costs, while ensuring that they can continue to attract top-caliber talent in an increasingly competitive labor market. Continued moderation in base salary increases are placing higher pressure on companies to build out more effective variable pay and non-financial reward programs.”

In the general industry group, the median pay increases of 3.0% were consistent across the board for executives, middle management, supervisory and clerical positions. Research also showed that pay increases had little variation between the highest and lowest paid employees. In fact, only a 0.5% difference exists between those employees in the 25th percentile value (2.5%) and 75th percentile value (3.0%).

The 3.0% median base salary increase holds fairly steady across most industries, including chemical, consumer products, financial services, health insurance, hospitals, industrials and utilities. One industry, however, did manage to stray from the status quo in favor of higher rewards. Data shows that employees in the oil and gas sector can expect median pay increases of 4.0% in 2014.

“Sectors with increases that vary from the general industry median tend to also have varied historical and future business performance outlooks,” said Jeff Blair, Hay Group’s US Productized Services Leader. “In most industries, however, we see significant employee flight risks given the improving economy and more employment opportunities for skilled workers. To keep these valued employees from searching for greener pastures, firms must address their employee engagement challenges and focus on reward programs that have the most impact on retention. Typically, these include incentive programs and key non-financial rewards, such as career development opportunities, meaningful job designs, work climate and recognition programs.”

Hay Group’s Reward Next Practices research study, conducted earlier this year, confirms this emphasis. According to the study, 56% of organizations are increasing future emphasis on improving their variable pay programs and 63% are focused on improving key non-financial reward programs.

About the Survey
Hay Group’s forecast results are based on the latest data available from Hay Group’s US database, provided by over 400 US organizations from March through June 2013. This is Hay Group’s 34th year of conducting the survey. Typical respondents to the survey include compensation professionals in the Human Resources departments of small to large US organizations across a wide range of industries. Hay Group’s US database represents compensation practices for over 2,400 companies and over 6 million employees.

For more information, or to arrange an interview, please contact Treg Lewis at 212.840.1661 or

About Hay Group
Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 86 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.

For Hay Group
Treg Lewis, 212.840.1661