Yahoo Finance Employers now hold more cards when it comes to remote work, raises, and fair pay
A wide-ranging study of compensation and employment trends suggests lower expectations are in order for workers seeking raises and remote work.
Fewer employers plan to bump up salaries this year, remote work is hanging by a thread, and pay transparency continues to face resistance — even with new laws requiring it in more states.
Those are the not-so-cheery findings of a new survey from Payscale examining compensation across industries.
“At present, employers have the upper hand in the job market, at least for white-collar salaried employees,” according to the researchers.
Time to lower expectations
Many workers hoping for a salary bump to cover pricey groceries, gasoline, and rent are plumb out of luck. This year, only 79% of organizations plan to give pay increases, a drop from 86% in 2023 and the lowest it has been in years, according to the report.
Base pay increases in 2023 averaged 4.8%, the highest level in two decades, but this year’s increases are expected to average around 4.5%, a hair above the current inflation rate of 3.2%.
The report, conducted between November and December, of more than 5,700 employers based primarily in the US is a reality check for workers who have grown accustomed to negotiating for higher pay and flexibility in where they work as employers struggled to fill positions the past few years.
Some workers showed discontent by walking out the door, but the take-this-job-and-shove-it approach has lost steam. Almost a third of organizations think they are losing talent due to insufficient pay increases, but that’s well below last year’s 41%. And employers seem to be taking it in stride.
The voluntary turnover rate has fallen from 25% in 2022 to 21% in 2023, and far below 36% in 2021, according to Payscale’s data.
Remote workers more likely not to quit
Most organizations, close to 60%, describe their office environment as either traditional or hybrid, which means that all or most employees need to live within a commutable distance of an office, even if they work from home part of the time.
Meanwhile, workers eager for flexibility in where they work are losing ground. In-person work has increased to 31% from 27% last year, and hybrid work has decreased to 26% from 31%. Only 11% of employers offer a fully remote work environment, which is unchanged from last year.
It’s not game over, though, for determined remote workers. Employers are discovering that the requirement for in-person work has repercussions. “Organizations with traditional workplaces tend to experience higher levels of voluntary turnover than those employers that offer hybrid or remote working,” according to Ruth Thomas, pay equity strategist at Payscale.
The voluntary turnover rate for traditional in-person work is 30%, around double that of both remote companies and hybrid work environments.
Resisting revealing salary ranges
By the end of last year, roughly 1 in 4 workers across the country were covered by a state or local law that requires businesses to be transparent about their pay range in job postings.
Six in 10 employers now share pay ranges in job ads — an increase of 15% over last year, according to Payscale data. But many do so reluctantly, and there are plenty that simply ignore the rules.
Telling someone how much you make is often a taboo subject both in the workplace and among friends — and that’s just how employers want it to stay. The lion's share of organizations told the researchers that “they do not encourage the sharing of individual pay” between colleagues.
That’s because when talk turns to pay, it’s likely to ruffle some feathers. Over a quarter (27%) reported that employees have been asking more questions about their pay, and 14% have had employees leave their organization because they saw job postings with higher pay elsewhere.
What’s behind employers’ aversion to pay transparency? The first reason is almost half of employers don't have their house in order, meaning a compensation strategy or a formal pay structure, which is expensive to create, according to Lulu Seikaly, Payscale’s senior corporate attorney for employment. The second reason is a desire to keep salary information from competitors.
“But with more and more states proposing and passing pay transparency laws,” she said, “employers are not going to be able to hide.”
More than a dozen Washington state employers, from Albertsons to Adidas, are dealing with pending class-action lawsuits alleging that they didn’t provide salary ranges on job postings as required by a new state mandate that became effective in January of 2023.
The Washington law applies to firms with 15 or more workers posting job listings on a company’s careers page or third-party job boards like Indeed or LinkedIn. Businesses must also provide the pay scale to a current employee for the job they hold, upon request.
The aim of pay transparency laws is to close the gender and racial wage gap by providing salary information that can help job seekers know how much they can negotiate pay rates, evaluate employment offers, and make it harder for employers to use past salary as a guide to what to pay.
Amy Stewart, Payscale’s associate director of content and editorial, added, “So it's a little bit of a wild, wild west, and when the government says put your pay ranges out there publicly, they go, 'Ooh, I don't know if we want to do that.'”
That attitude could come back to bite them. When it comes to pay transparency, the Society for Human Resource Management has found that 70% of organizations that list pay ranges in job postings say doing so has led to more people applying, while 66% said disclosing pay has increased the quality of applicants.
“Pay transparency’s impact extends far beyond the laws themselves, as it’s affecting job seeker behavior when it comes to which jobs they’ll even consider applying for,” Thomas said. “This has a direct impact on organizations attracting and retaining top talent. Companies seeking the best and brightest talent must adopt transparent pay practices, or they’ll risk growth and ongoing reputation challenges.”
Ignoring pay gaps
And here’s a whopper: Over a quarter of employers are not worrying about closing racial and gender pay gaps. When Payscale’s researchers asked what organizations were doing to address severely underpaid employees in their organizations, the response for a sizable chunk was zilch until someone pushes back.
“Surprisingly, we saw a figure of 27% of companies who are only reactively addressing those employees,” Thomas said. “And that's if an employee or their manager asks, ‘Why am I not being paid fairly?’ That's quite a significant number.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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