Pay rates take small step forward

Raises are making a comeback this year, but the increase probably won't be enough to make up for last year's salary freezes.
Franklin-based Clarcor Inc. is typical of this trend. After freezing salaries last year, the company that makes new and replacement filtration systems plans to give merit-based raises this year, Chairman and CEO Norm Johnson said.

The increases, though, will be smaller than usual.

"We expect the economy to certainly be better than it was in 2009, but we don't expect it to be at 2008 levels, and that's the reason they'll be smaller," he said.

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"We recognize that our people went a year without an increase, and we're expecting a better year and will recognize their accomplishments," he said, noting that he and other senior managers will be excluded and will not get merit raises until the economy has markedly improved.

Raise pool is just a puddle

The amount of money companies have budgeted for raises this year is at the lowest level in at least 25 years and will not keep up with inflation, according to The Conference Board, an independent research association.

"Gas prices, food — everything is going up except for my paycheck," said Connie Richards, 52, who works as a cook for a company that subcontracts with the state. The Lebanon woman said she hasn't had a raise in three years, and her boss says not to count on one this year.

"I've been very close to losing my car because I'm behind on payments," she said. "And, I just found out I've lost my insurance."

The turning point on compensation is probably a few years away as high levels of unemployment allow businesses to limit raise demands from existing workers and hire workers from the ranks of the unemployed at lower compensation levels, according to The Conference Board.

Another compensation study shows that 65 percent of companies that froze salary budgets in 2009 will unfreeze them this year.

"Companies are making an effort to gradually return some sense of normalcy to compensation budgets in the coming year," said Ravin Jesuthasan, managing principal at Towers Perrin, a professional services firm.

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