Despite Economic Uncertainty, US Employers Maintain Elevated Compensation Budgets for 2025, According to Mercer

Employers also plan to promote 9.3% of employees in 2025, up from 8% in 2024

Today, Mercer, a business of Marsh McLennan (NYSE: MMC) and a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people, released the results of the November 2024 Mercer QuickPulse™ US Compensation Planning Survey.

According to the survey of more than 850 US organizations, employers are planning to raise their compensation budgets by 3.3% for merit increases and 3.7% for total salary increases for non-unionized employees in 2025. Sixty-nine percent of surveyed employers expressed confidence in their compensation budget projections. These figures remain consistent with the actual merit and total salary increases delivered in 2024, which were 3.3% and 3.6%¹, respectively.

While these planned increases are similar to last year, they remain above historical trends, confirming that employers are prioritizing talent investment even in the face of economic uncertainty.

“Amid a persistently tight labor market and low unemployment, employers are recognizing the need to invest in their workforce to drive retention,” said Lauren Mason, Mercer’s US Workforce Solutions Leader. “To remain competitive in this environment, employers will need to look beyond compensation and transform work itself to improve the employee experience and unlock greater productivity.”

The majority of employers (80%) indicated that they have not finalized their compensation budgets. Among those with approved compensation budgets (20%), their 2025 budget projections were consistent with the projections made in August for all surveyed employers, which were 3.3% for merit increases and 3.6% for total salary increases.

The survey also revealed industry variations. The technology sector reported above-average compensation budgets, with increases of 3.5% for merit and 3.8% for total compensation, while the healthcare services industry reported below-average increases for merit and total compensation of 3.0% and 3.5%, respectively.

Employers are planning to promote 9.3% of employees in 2025, up from 8% in 2024. Many employers reported a flexible approach to promotions, conducting them as needed or via two or more cycles per year. This emphasis on career and compensation progression demonstrates a commitment to retaining essential talent and skills while fostering employee engagement and loyalty.

Reflecting the move towards greater pay transparency, 18% of companies said they are sharing pay ranges with all employees and candidates, while another 27% are considering this action. The August 2024 Compensation Planning Survey revealed that 52% of employers plan to conduct pay equity studies to meet rising transparency demands, underscoring a strong focus on fair pay practices.

“When employers aren’t clear about pay, employees create their own narratives—and those stories can be more negative than the reality,” said Ms. Mason. “Despite significant investment in pay in recent years, employee satisfaction with fair pay is still on the decline.”

“Companies should continue to redesign and communicate how pay decisions are made, ensuring every dollar invested closes critical gaps and contributes to a more transparent, fair and rewarding experience,” Ms. Mason added.

Note to editors:

Total salary increase budgets include base pay increases such as those tied to promotions and cost of living adjustments, in addition to merit increases.

About Mercer’s US Compensation Planning Survey

The November 2024 Mercer QuickPulse™ US Compensation Planning Survey includes data from more than 850 organizations in the US, from small employers (less than 500 employees) to very large employers (over 20,000 employees) across 15 industries. This study was fielded between October 21 and November 1. To review more of the findings, click here.

About Mercer

Mercer, a business of Marsh McLennan (NYSE: MMC), is a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people. Marsh McLennan is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit mercer.com, or follow on LinkedIn and X.

¹March 2024 QuickPulse™ US Compensation Planning Survey

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