Massachusetts employers plan slightly larger pay increases in 2019 than in 2018, though the projected raises remain below the national average, a new AIM survey has found.
The 2018 Associated Industries of Massachusetts HR Practices survey found that employers project a 2.86 percent salary increase for 2019, up from 2.66 percent in 2018. Salary increase budgets have remained less than 3 percent since the recession of 2009, despite a 3.4 percent state unemployment rate and a persistent shortage of qualified workers.
AIM survey participants also project an increase in recruitment activity during 2019. Forty-two percent of employers expect an increase in recruitment activity versus 33 percent last year.
National surveys predict average salary increases of 3.2 percent this year. MassBenchmarks reports that wages and salaries for Massachusetts workers rose an average of 3.2 percent during the second and third quarters.
“With unemployment trending down and the January 1, 2019 minimum-wage increase, HR professionals across the state will continue to face new challenges. They’ll need to stretch payroll budgets; attract, retain and reward top talent; and comply with new and existing requirements across the entire HR spectrum,” said Gary MacDonald, Executive Vice President of AIM HR Solutions, which conducted the survey.
Manufacturing companies anticipate the most generous 2019 salary increases at 2.9 percent. Service companies expect to boost wages 2.65 percent.
The salary projections come amid a swirl of contradictory economic and regulatory signals ranging from an impending increase to the Massachusetts minimum wage and implementation of paid family and medical leave to a slowdown in cost increases for health insurance.
Health premium increases for HMOs slowed to 6.35 percent during 2018 from 8.32 percent in 2017. Similar price moderation took place within consumer-driven health plans, tiered networks and high-deductible health plans.
Still, rising health premiums continue to force employers to shift costs to employees. Forty-eight percent of companies plan to increase co-payments for HMO plans during 2019, while 33 percent will boost deductibles and 55 percent will increase employee costs.
Eight companies are seeking to control health costs by prohibiting spouses from enrolling in coverage if they have access to health insurance through their own employer.
The Massachusetts minimum wage will increase to $12 per hour in 2019 and then accelerate to $15 per hour by 2023, a shift many employers believe will cause wage compression and drive up annual pay. Premium pay for Sunday retail work will be phased out during the same period.
The HR Practices survey results are based on responses from 170 companies, more than half of them manufacturers.