Talent Talk: Salary Increase Expectations for 2025

As most are aware, the red-hot labor markets of 2022 and 2023, arguably the tightest the US economy had seen since World War II, have eased in recent months. For manufacturing in general, and the plastics industry in particular, that will provide a window where finding and attracting talent will be somewhat easier than in the past couple of years.

As with all things cyclical, that window will not stay open forever, but that is another topic for another day. Today I want to focus on what this will mean for salary budgets, as HR and hiring managers soon will be preparing those for 2025.

Salary predictions from the Conference Board

Those who lived through those hiring difficulties will also remember how expensive it became to land someone from the industry. Top performers were asking for — and receiving — 15 to 20% increases and sometimes even more. Sign-on bonuses became the norm, not just for executives, but all the way down to key individual contributors.

I bet you’re thinking it won’t be so expensive to hire in 2025, right? You might think that, but a recent report indicates that may not be the case. A Sept. 8 report by the Conference Board showed that base salary increases for 2025 are projected to be the same, or slightly higher — 3.9% vs 3.8% — than in 2024.

Related:Manufacturers Lean into Automation, AI to Fill Skilled Worker Gap, Survey Says

Whither bonuses?

The Conference Board surveyed 300 compensation leaders and found that elevated wages are expected to continue into 2025, even as the pace of hiring slows. This is being driven by a shrinking skilled labor supply where businesses will focus on retaining their current workforce. While most companies said they’ll continue one-time bonuses, like sign-on and retention incentives, the trend is toward reducing as opposed to increasing them.

Workers expect competitive salaries

A separate report by software company Payscale concluded that even though the economic conditions may be changing, workers still expect competitive pay. As I’m writing this, Boeing workers have rejected an offer that reportedly would have increased their wages by 25% over four years. Anecdotal stories like this would not indicate that there are going to be discounts in the labor market any time soon.