As reported by Patricia Cohen (see One-Time Bonuses and Perks Muscle Out Pay Raises for Workers), employers are avoiding salary increases – even for their best workers – by using bonuses and non-monetary rewards.
“There is a quiet revolution in compensation,” said Ken Abosch, a partner at Aon Hewitt, a global human resources company. “There are not many things in the world of compensation that are all that radical, but this is a drastic shift.”
According to Aon Hewitt’s annual survey on salaried employees’ compensation, the share of payroll budgets devoted to straight salary increases sank to a low of 1.8 percent in the depths of the recession. It dropped to 4.3 percent in 2001, from a high of 10 percent in 1981. It has rebounded modestly since the recession, but still only rose 2.9 percent in 2014, the survey of 1,064 organizations found. (These figures are not adjusted for inflation.)
Aon Hewitt did not even start tracking short-term rewards and bonuses — known as variable compensation — until 1988, when they accounted for an average of 3.9 percent of payrolls. Ten years later, that share had more than doubled to 8 percent. Last year, it hit a record 12.7 percent.
So, another way that senior management is rigging the game, keeping labor costs down and increasing the inequality in compensation.
from Stowe Boyd http://stoweboyd.com/post/119933372442
