The Associated Press
NEW YORK - Despite an improved economy, cost-conscious employers are granting workers limited pay raises this year, and plan only slightly larger increases in 2005.
Companies are budgeting pay increases of 3.3 percent to 3.5 percent this year - the third in a row below the 4 percent-plus level that was routine in the 1990s - and plan raises of 3.5 percent next year, according to a pair of surveys.
The modest raises will keep workers' pay increasing faster than the rate of inflation. But higher worker contributions for health care could eat up much of the pay gains, analysts said.
Employers have seen business conditions improve. But employers are wary of taking on big pay raises, said a survey to be released today by Mercer Human Resource Consulting.
That dynamic is unlikely to change much in the next few years, concludes the Mercer survey and another issued last month by the Conference Board.
"There's been a change in the deal, so to speak, between employees and employers ... and I don't see anything on the horizon to ease that up," said Steven Gross, a compensation consultant for Mercer.
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