U.S. employers are forecasting an average salary increase of 3.5% for 2025, according to Payscale’s latest survey. This anticipated raise varies across industries. Government employees, along with those in engineering and science, can expect increases exceeding 4.5% and 4.2%, respectively. In contrast, workers in retail, customer service, and education are projected to see raises of just 3.1%.
Ruth Thomas, chief of research and insights at Payscale, attributes the slight reduction in planned salary increases to stabilized inflation and easing labor market conditions. Despite this dip, she notes that the 2025 figures are still above the pre-pandemic baseline of 3% that employees have come to expect.
The trend of moderating salary increases follows a pattern observed in a cooler labor market. In 2023, actual salary increases were around 4%, while this year’s figures have dropped to 3.6%. Although the growth rate has softened, it remains relatively high compared to historical standards. For instance, 2023’s increase of 4% was the highest since 2008, as noted by firm WTW.
There is a slight discrepancy between Payscale’s and WTW’s projections. WTW forecasts a 3.9% increase for 2025, which could be due to variations in their employer samples or calculation methods. Despite these differences, both sources reflect a similar trend in compensation.
For many workers, high nominal salary increases might not fully address their concerns. Payscale’s Real Wage Index highlights that, while wages have risen 33.1% since 2006, real wages—adjusted for inflation—have actually fallen by 12.6%. This means today’s income buys less than it did nearly two decades ago. Surveys echo this sentiment, with many respondents feeling their pay isn’t keeping pace with inflation.
