America’s Wealth Gap May Worsen As Workers Can Expect Just A 3% Raise
If you think the poor will get richer anytime soon, then you are in for a shock. According to a study by the Harvard Business School titled “An Economy Doing Half Its Job,” American companies, especially large ones, were showing some signs of recovery, but despite this workers would probably continue to struggle for better pay and benefits.
The report is based on a survey of 1,947 of Harvard Business School alumni worldwide, and pinpointed problems with the U.S. education system, transport infrastructure, and the effectiveness of the political system.
“Some 47 percent of respondents in the survey said that over the next three years they expected U.S. companies to be both less competitive internationally and less able to pay higher wages and benefits, versus 33 percent who thought the opposite,” reports Reuters.
This is better than in 2012, when a Harvard Business School survey of its alumni found 58 percent expected a decline in U.S. competitiveness.
Harvard wrote, 2014 respondents “were much more hopeful about the future competitive success of America’s firms than they were about the future pay of America’s workers.”
Still the university urged corporate leaders to assist in solving America’s wealth gap by working to supporting the kindergarten-to-12th-grade education system, skills-training programs, and transportation infrastructure, in addition to other things.
While the Harvard study didn’t see an end to the wage gap, US employers are expected to give workers pay raises averaging three percent next year, about par with the 2.9 percent average raise in 2014 and 2013, according to a survey of nearly 1,100 U.S. companies, conducted by compensation consultant Towers Watson. This will be right in line with the inflation rate, which is currently running at about 2.1 percent. So don’t expect to be saving much money this year.
“Top performers who received the highest performance ratings received 4.5 percent raises this year, while average-rated workers got a 2.6 percent boost,” reports USA Today.
Yet a broader international Towers Watson study discovered that companies are lagging behind in pay and incentive programs and are not really differentiating pay. Of the more than 32,000 employees polled, only 50 percent felt they were as justly compensated as their peers, and just 40 percent have clear ties between pay and performance.
Also, as the labor market shifts into high gear, soft salary increases could encourage more turnover. According to the Bureau of Labor Statistics, the median annual salary among the country’s 106.6 million workers stands at about $40,560.