Scottsdale, U.S.A. — Nowhere is the law of supply and demand felt more strongly than in the U.S. labor market. While U.S. unemployment decreased from 9.3 percent to 8.8 percent for the 12-month period ending April 2012 (according to BLS.gov), it was not enough to boost salary budget increases and, subsequently, employee wages.

Pay increase budgets at U.S. employers have picked up slightly from all-time lows in 2009, going from an average (mean) of 2.2 percent to 2.8 percent in 2012, according to the 39th annual “WorldatWork 2012-2013 Salary Budget Survey.” But the movement does not appear to be coming from organizations awarding larger pay increases. Instead, it stems from fewer organizations reporting 0-percent increases, or frozen salary budgets. The number of 0-percent responses has declined from 33 percent of employers in 2009 to this year’s figure of just 5 percent.

“There is an inverse relationship between the spike in organizations budgeting 0 percent and the overall average salary budget increase,” explained Alison Avalos, a Certified Compensation Professional (CCP) and research manager for WorldatWork. “Picture an iceberg thawing and its reflection in the water, with the portion of organizations freezing pay increase budgets represented by the portion of the iceberg visible above the water.

When pay budget freezes spiked in 2009, overall mean and median salary budget increases plummeted, pulled down by the zero values. The overall average salary budget seems to be holding steady at close to 3 percent, but the growth is not because employers are being aggressive with salary increase budgets. It is mostly because the number of 0-percent responses has declined in the three years since the recession.”

With average (mean) salary increase budgets below 3 percent for the fourth consecutive year, managers may be tempted to skip differentiating employee performance altogether. But with such modest salary budgets, pay for performance should actually be more heavily underscored, according to Kerry Chou, a Certified Compensation Professional (CCP) and practice leader at WorldatWork.

“In order to accomplish this, you need to effectively allocate available salary dollars, which could mean low or no raises for marginal performers. And while this isn’t a pleasant conversation for managers to have, in the long run it’s easier than losing your stars to the competition and then spending far greater sums to find replacements. A small pie can still be a great dessert; you just need to serve bigger pieces to fewer guests.”

Other Key Salary Budget Survey Findings:

Major Metropolitan Area Data

Companies located in or reporting data for employees in Detroit reported the lowest overall average salary increase budget at 2.6 percent for 2012, while Houston-area employers reported the highest, topping 3 percent. Most metropolitan areas reported average salary budget increases ranging from 2.7 percent to 2.9 percent for 2012, and 2.9 percent to 3.1 percent for 2013. To see the impact of the slight rise, consider a company with a $100 million payroll. Two-tenths of one percentage point equals $200,000 in additional pay increases.

Industry Data                                                                      

Pay increase budgets for public administration hit an all-time low of 1.3 percent in 2010 and 2011, but have risen to 1.7 percent in 2012. Conversely, the mining industry is far above national figures, with average 2012 salary budget increases at 4 percent.

Variable or Incentive Pay

The percentage of organizations using vari­able pay grew to 82 percent this year, up from 79 percent in 2011. A combination of awards based on organization/unit success and individual performance continues to be the most prevalent type of variable pay program.

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The economic proposals and critics are now the center of the presidential campaign. Both candidates are presenting their economic proposals and critics in the key states. Obama is accusing Romney on favoring the rich with tax cuts and Romney is blaming Obama for the high unemployment rate the nation is facing.

President Obama has targeted Florida, Ohio and Virginia; he won the three states in the 2008 election. His strategy continues, he assures that Romney’s tax plan would benefit the wealthy and would force the middle-income taxpayers to pay more.

Obama’s visit to Florida is crucial, the Sunshine State has an unemployment rate of 8.6 percent one of the highest in the nation, the Democrats will have to work hard if they want to continue having the State’s support. The Republicans want to regain control of Florida, so they organized their convention in Tampa. Virginia on the other hand has an unemployment rate of 5.6 percent, so the Democrats wont have that much trouble in winning this state again. In Ohio the unemployment rate is 7.3 percent, which is a little bit lower than the national average of 8.2 percent.

Mitt Romney on the other hand centers his attention onto Colorado, a state the Republicans lost in the 2008 election. He planned to make an appearance with other Republican governors, some of which are possible vice-presidential picks.

Romney visits this state after his trips where he met with different foreign dignitaries and went to the London Olympics opening; Colorado has an 8.2 percent unemployment rate which is equal to the average of the nation. He needs to emphasize that he will change the unemployment rate  in order to regain the state’s support.

Mitt Romney’s campaign team has elaborated a video with hard critics against President Obama, blaming him for Florida’s high unemployment rate. The video also accuses Obama on focusing on the Obamacare instead of jobs and says that the president is not concerned about Florida’s economy.

The economic issue will continue in the center of the political debate as the government releases on August 3, the July hiring and unemployment trends. According to several economists the number should be better than the past three months, in which 75,000 new jobs posts were created. In July they calculate 100,000 new jobs have been created. But the numbers are still low compared to the healthy 226,000 average in the first three months of the year.

Image Courtesy of   spirit of america / Shutterstock.com

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Pennsylvania, U.S.A. — Pennsylvania’s seasonally adjusted unemployment was 7.5 percent in June, up one-tenth of a percentage point from the 7.4 percent May rate. Pennsylvania’s unemployment rate was below the U.S. rate of 8.2 percent, and has been below the U.S. rate for 50 consecutive months, and at or below the U.S. rate for 68 consecutive months.

June was the first increase in Pennsylvania’s unemployment rate since July 2011. The state’s unemployment rate was down 0.5 percentage points from June 2011.

Pennsylvania’s seasonally adjusted civilian labor force – the number of people working or looking for work – was up 16,000 in June to 6,469,000. Resident employment was up 3,000 to 5,981,000, and the number of unemployed residents was up 13,000 to 488,000. Pennsylvania’s labor force was 97,000 above its June 2011 level.

Seasonally adjusted total non farm jobs in Pennsylvania were up 14,600 in June to 5,729,700, the highest level since December 2008. This was the first increase in the past three months. Both goods producers and service providers added jobs from May, but the majority of the increase was in service providing industries.

Government had the largest increase of any super sector, up 9,000 with most of the gain in local government. Three super sectors, leisure and hospitality, mining and logging, and professional and business services, reached record high levels in June.

Pennsylvania’s job count was up 37,200 (0.7 percent) over the year while national total non farm jobs were up 1,777,000 (1.4 percent) over the past 12 months.

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