Workers Could See Their Largest Pay Bump in 15 Years in 2023

Will you be in line for a generous raise?

In today's labor market, it's easy to argue that workers have the upper hand. Many companies are desperate to hire, so much so that they're offering up higher wages in an effort to attract talent.

Employers will also need to do their part in the coming months to retain staff. And a good way to achieve that is to be generous with giving out raises.

Thankfully, things are looking up from a compensation standpoint. Recently, consulting firm Willis Towers Watson polled over 1,400 employers and found that U.S. companies plan to give workers an average 4.1% raise in 2023. That would amount to the largest across-the-board pay bump in 15 years.

Now, an increase in pay is something for workers to be happy about. Higher salaries could make it possible for workers to build savings, pay off credit card debt, and move closer to meeting other goals, like buying a home or being able to go back to school.

But while a 4.1% raise might seem generous, it's also important to keep that raise in perspective. And even if it comes down the pike, it may fall short for a lot of people.

Why even a generous raise may not cut it

A 4.1% pay boost is higher than what the typical worker gets each year, but it may not be enough to help workers maintain their buying power in the face of inflation. Recently, the rate of inflation reached 9.1%, as per the latest Consumer Price Index reading. If inflation continues at that pace, many workers will struggle even if their wages increase by 4.1%.

Making matters worse is that many of the companies that allowed their employees to work remotely earlier on in the pandemic are now calling workers back to the office. That means employees are grappling with commuting costs and high gas prices after potentially having spent months without factoring in those expenses.

Workers should fight for more

Even though wage growth of 4.1% is respectable, in today's inflation-fueled economy, it may not boost workers' bank accounts enough to maintain their standard of living. As such, employees may want to fight for the highest wages possible -- even if that means having to step outside their comfort zones to negotiate.

The reality is that right now, companies can't afford to lose quality employees. And some may have to ramp up on the payroll front to avoid mass resignations.

That said, fighting for higher pay isn't an easy or comfortable thing to do. But the good news is that there's a world of salary data out there. And so those seeking a raise -- or a more generous one than what their employers offer up -- should spend some time doing research to ensure they're being compensated fairly. A 4.1% raise may seem generous at first glance -- but not for an employee who's earning 10% less than the typical worker with the same job title and qualifications.