Salary planning isn’t just about numbers— it’s a critical role in aligning compensation strategies with market conditions, attracting and retaining talent, and supporting long-term organizational growth. To ensure salary recommendations are competitive and up to date, our Compensation Consulting team conducts annual evaluations of key data points, ensuring your organization stays aligned with the latest market trends. Here’s a look at the crucial data points that guide effective salary planning.

Employment Cost Index (ECI)

Published by the U.S. Bureau of Labor Statistics (BLS), The Employment Cost Index (ECI) is a critical measure that tracks quarterly changes in the cost of labor, including wages and salaries, across the national economy. It serves as a benchmark for understanding how labor costs are evolving, making it a foundational element in developing a salary structure that aligns with your industry.

Consumer Price Index (CPI)

Also published by the BLS, the Consumer Price Index (CPI) is an indicator of inflation, which is essential for understanding the purchasing power of wages. It measures the average change over time in the prices paid by consumers for goods and services. Tracking the CPI helps assess whether salary increases are keeping pace with inflation.

Salary Budget Surveys

Salary budget surveys capture data from organizations on compensation actions from the prior year and forecasts for the next year. This data is imperative to two primary areas:

• Structure Updates: Surveys provide insights into employers' planned adjustments to their salary structures for the upcoming year. This forward-looking data helps ensure that your pay structures remain competitive with the broader market.
• Salary Increases: Surveys also offer projections for how much employers plan to increase salaries in the coming year. This information is crucial for setting salary increase budgets that align with market trends and promote meaningful pay progression for employees.

In addition to these core areas, surveys help facilitate discussion on topics that are crucial to your strategy. This can include pay-for-performance allocations, promotional increases and geographic differentials.

Wage Growth Tracker

The Federal Reserve Bank of Atlanta offers a Wage Growth Tracker that monitors the median wage growth of individual workers. Understanding how wages are evolving for workers who remain in the same job provides additional context into interpreting the overall market wage movement. This stable measure of wage growth accounts for changes in the labor market without the distortions caused by job changes.

Average Hourly Earnings

Average Hourly Earnings (AHE) is a measure of the average earnings of employees per hour worked, as reported by the BLS. Continuous monitoring of AHE shows overall wage growth and how it aligns with other economic indicators. AHE is particularly useful for understanding how earnings are changing in response to market conditions.

Ratio of Job Openings to Unemployed Persons

The ratio of job openings to unemployed persons can be found on the BLS and is a critical indicator of labor market tightness. Monitoring this ratio provides insight into the competitiveness of the labor market and the likelihood of wage increases driven by supply and demand dynamics.

Incorporating these data points into your salary planning ensures your compensation strategies remain competitive and aligned with your market. As the labor landscape continues to evolve, our Compensation Consulting team is ready to help you navigate the complexities, ensuring your organization attracts and retains the best talent while staying ahead of market trends.

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