Daily Management Review

Benefits and compensations in the US grow faster than salaries


09/19/2018


According to the US Department of Labor, US employers have been increasing bonuses and various types of compensation more than staff salaries. Experts believe that this does not necessarily mean an increase in confidence of employers in the state of the economy and business, but rather vice versa. This fact witnesses more cautious sentiment, because it is easier to roll back such payments than to cut salaries in the event of deterioration in the US economic situation.



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According to the US Department of Labor, in June alone, private sector wages rose 2.7% compared to the same period last year, while bonuses and other forms of employee encouragement rose by a mere 3%. The largest increase, by 12%, occurred in extra-fee forms of encouragement in the bonuses segment.

Thanks to economic growth and tax reform in the US, many companies receive additional free funds that are allowed to pay dividends, finance acquisitions, or buy back shares from the market. According to UBS, the amount of free cash from corporations in the US is about $ 2.5 billion, another $ 1.5 trillion can be formed as a result of tax reform.

US experts are not prone to excessive optimism in assessing the growth trend of bonuses and other extra-salary incentives for employees. As the director of Robert Half's recruiting agency, Ryan Sutton, told The Wall Street Journal, "The growth of bonuses and other types of extra-salary incentives from employees only indicates that workers can take advantage of the current moment to get more. But companies are still not ready to raise salaries and basic salaries."

According to director of the specialized recruitment agency Selby Jennings Oliver Cooke, extra incentives give companies more room to control costs. "Instead of announcing an increase in the basic salary in the whole company, you can choose 10, or 50, or 100 people, which you consider to be the most important," the expert said.

Professor of Economics at the University of Minnesota Fatih Guvenen believes that the growth of extra-salary forms of employee encouragement, paradoxically, sounds less beneficial for the employees themselves. "Bonus payments are never guaranteed," he said and added that it is easy to refuse the payment of bonuses in the event of a recession or business activity.

source: wsj.com






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