Salaried Workers Should Get Small Raises in 2012

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By Tali Arbel, AP Business Writer

NEW YORK (AP) — A new survey says salaried U.S. workers can expect another year of modest raises in 2012.

After increasing salaries by 2.6% this year and last year, companies are planning a 2.8% bump in 2012, benefits and human resources consultancy Towers Watson reported Monday.

That's somewhat smaller than raises in the last decade. From 2000 to 2006, the year before the Great Recession began, salaries rose an average 3.9% for workers who were not executives.

And the modest bump may not help add much buying power for shoppers. In the 12 months through July, prices for consumers have risen 3.6%, according to the government's latest calculations.

Salary increases have been small, even though many companies are sitting on huge cash stockpiles. They're being conservative with permanent salary hikes because of uncertainty about the economy and memories of the deep cuts during the recession, said Laura Sejen of Towers Watson.

Because of worries about the economy, companies are trying to avoid "fixed costs," such as permanent payroll increases, Sejen said. Hiring has also been tepid this year. More than 9% of the country's workers, or 13.9 million people, are unemployed.

Instead, companies "are trying to put more emphasis on the variable components of compensation," she said. That means bonuses, which make up a far bigger chunk of total pay for executives than for other salaried workers — 41% this year, versus 10%.

Salaries for executives are also expected to rise 2.8% next year, the survey said.

The human resources company conducted the survey in June and July, polling 773 U.S. companies.

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