The Employers’ Association released its 2018-19 Wage & Salary Survey, which found overall pay rates in the region have increased between 2.5 percent and 3.5 percent since 2017.
TEA is a not-for-profit association providing human resources-related services, including research, benchmarking, training, consulting and employment, to about 500 West Michigan members.
David Smith, CEO of TEA, said annual income growth of between 2 percent and 4 percent is the “ballpark” average for the region and has been true for at least the past decade. Even growth of 2 percent to 3 percent was typical during the Great Recession, he added.
“(The growth rate) might be a little more now, but not a lot,” he said.
Smith said TEA usually tells clients to budget for 2 percent to 3 percent in annual salary and wage increases, but whether that happens varies based on the health of the company.
“It’s driven by profitability, and companies can’t double their rates to afford pay increases,” he said. “It’s a profit-driven equation.”
Smith said wage increase rates varied by rank within an organization, with entry-level employees’ wages rising around 3-4 percent because employers need to attract and retain talent from outside the organization, and leadership wages rising around the same percentage for the same reason.
Mid-level employees saw a more modest increase of 2-3 percent, but Smith included a caveat.
“The people in the middle are getting pay increases, but it might be by moving up into supervision,” he said. “When you look at survey data (for mid-level positions), it might not change that much, but it doesn’t show they are leaving the job for a higher-level promotion.”
By the same token, when pay rates for one position go down from one year to the next, Smith said it’s sometimes due to retirement.
“If a senior engineer were to retire making $80,000 and has been with the company 15 years and is replaced by an entry-level or two entry-level engineers, the average compensation coming in is $60,000, so it appears it went down, but it’s because expectations are different,” he said.
Ancillary insights Smith drew from the report include the fact companies are investing many resources into culture, conducting employee surveys and adopting programs to foster and improve engagement alongside compensation changes.
Also new in the last few years is employers’ willingness to make structural changes to their organization because of millennials’ preferences; for example, adding new levels in the hierarchy so younger employees can see a clear path toward advancement.
Pay equity and fairness also is a hot topic, Smith said, with many companies scrapping cost-of-living raises in favor of merit increases.
“Companies are looking at pay holistically — paying employees based on contributions to the organization’s success … rather than across-the-board increases,” he said.
Smith noted West Michigan employers can get away with not doing yearly increases because of the region’s low cost of living.
“If you give a standard increase, you can get some positions that are overpaid, and you end up paying for time in a job as opposed to performance,” he said.
Organizations also are changing the way they evaluate job performance, opting for continuous coaching rather than yearly meetings linked to pay increases. And the meetings? Millennials want them to have a positive spin, Smith said.
“It’s conversations stressing how to improve strengths and not overcome weaknesses,” he said. “It’s a step away from tradition.”
Another way companies are sidestepping traditional wage discussions is by offering “work-life balance” perks, such as additional paid time off days and increased scheduling flexibility, paired with — or instead of — a smaller raise.
Smith said members and nonmembers alike use the report to benchmark their practices against those of companies of a similar size and industry.
“It doesn’t mean you have to be equal, you just need to be aware,” he said.
Sample findings by position and wage/salary increase:
Manufacturing/process engineer II — $75,654.07 in 2017 to $76,521.94 in 2018, an increase of 1.2 percent
Accountant II — $53,192.99 in 2017 to $55,038.50, an average increase of 3.5 percent
Driver III — $19.27 in 2017 to $19.56 in 2018, an average increase of 2.6 percent
Production helper — $13.64 in 2017 to $14.27 in 2018, an increase of 4.6 percent
Tool & die maker I — $19.81 in 2017 to $20.78 in 2018, an increase of 4.9 percent
The survey represents data from 262 organizations in West Michigan for 343 jobs within 16 major job families.
TEA members primarily are in the manufacturing, sales and service, and nonprofit sectors, with about one-third divided among other industries.
The survey wage data is calculated by average, weighted average, median, 25th/75th quartiles and 10th/90th percentiles. Variable pay (bonus) data also is displayed. In addition, the overall data for each job can be compared by company size, industry, geographic location and union status.
The 340-page report, which includes a breakdown of pay, pay at risk, policies and practices among participating TEA members, is available to those who took the survey free of charge. Members that didn’t take the survey can receive a survey summary.
Nonmember employers can purchase the report at teagr.org.