U.S. Raises are Trending Down This Year As The Job Market Cools

While 2024 holds promise for several financial markets, the prospect for employee raises appears somewhat dimmer, suggests a WTW study.

Employers in the U.S. anticipate an average wage increment of 4% this year, a marginal step down from the 4.4% increase in 2023. Nonetheless, this shouldn't discourage employees since it's still notably higher than the average salary rise of 3.1% experienced in 2021, the report points out.

The Cooling Effect

According to a recent report by SHRM, experts predict slight increases in unemployment and layoffs this year1. It's a bit like when you're at a party, and everyone's having a great time, but then the music suddenly switches from rock and roll to smooth jazz. It doesn't mean the party's over, just that the tempo has changed.

This shift in pace is also seen in data from Reuters. They noted that while job openings unexpectedly increased in December, the overall labor market is gradually cooling2.

Now, don't get me wrong. A cooling job market isn't necessarily a bad thing. Remember the red-hot job market levels of 2021 and 2022? The Federal Reserve was keen on seeing those cool down to reduce pressure on businesses to raise pay3.

What Does This Mean For Your Wallet?

Okay, let's cut to the chase. How does this cooling trend affect your potential raise?

Simply put, when the job market cools, companies are more cautious with their budgets, and that includes salary increments. It's similar to when you're playing Monopoly, and you're not sure if you should splurge on hotels for Boardwalk or keep some cash handy for unexpected expenses. Companies, too, are weighing their options.

But even amidst this cooling trend, there's some good news. U.S. job growth accelerated in January, and wages saw their most significant increase in nearly two years4. So, while raises may be trending down overall, it's not a universal trend.

Navigating The 2024 Job Market

Forbes suggests five economic trends that need to maintain their momentum for the 2024 labor market to progress smoothly5. It's like trying to keep all your ducks in a row while riding a unicycle. Not an easy feat, but doable with some practice and balance.

And let's not forget, even though Fed Chair Jerome Powell calls the labor market 'strong,' many Americans feel discouraged about their job prospects6. It's a bit like being told the roller coaster ride is safe and fun, but you can't shake off the butterflies in your stomach.

So, what's the best strategy in this scenario? Stay updated, stay skilled, and stay adaptable. Remember, the only constant thing in life is change. So, whether the job market is hot, cold, or lukewarm, your ability to adapt will be your strongest asset.

In conclusion, while the U.S. raises may be trending down as the job market cools, it's not all doom and gloom. The market is simply adjusting, like a pendulum finding its center after swinging wildly. So, here's to navigating the 2024 job market with grace, resilience, and a dash of humor. After all, as the old saying goes, "This too shall pass."