From CNBC: 2024-07-24 09:00:01

Many workers will see smaller annual raises next year as the job market cools from its rapid pace during the pandemic. The typical worker is projected to receive a 4.1% pay raise for 2025, down from 4.5% this year, according to a poll by WTW. The survey included 1,888 U.S. organizations. Companies may pay out annual raises by April 1, 2025.

Demand for workers surged in 2021 and 2022 amid a robust job market, leading to higher pay and a record number of 50 million resignations in 2022. Companies had to offer incentives such as signing bonuses to compete for talent. The prevalence of signing bonuses has decreased from almost 7% of job listings in 2021 to 3.8% in 2024.

The job market has cooled with declining hiring, quits, and job openings, leading to an increase in the unemployment rate. Companies may offer lower salary budgets for 2025 as the demand for talent has decreased. This shift represents a return to a more normal job market environment, according to experts.

Despite the projected decrease in the typical pay raise for 2025, the 4.1% raise is still higher than in previous years. In the years following the 2008 financial crisis, median annual pay raises were around 3%. The increase to over 4% during the pandemic era was unprecedented, and the raises have remained relatively high.

Read more: Why you may get a smaller pay raise in 2025