Payroll company ADP released a new study Monday in which workers around the world expressed expectations that their salaries and pay would continue to increase even as inflation has come down from 40-year highs of in 2022.
The study looked at 18 countries including the U.S. and found that the 35,000 workers in the study expected an average of more than a 5 percent increase in their salaries in 2024. This is more than the average 4 percent salary increase seen last year.
In the U.S., inflation has come down from an average of 8 percent in 2022 to around 3.5 percent so far in 2024. Prices on many goods and services have stabilized, but are now at least 20 percent higher than they were before the pandemic.
“While global inflation has lessened considerably over the past three years, people still haven’t fully adjusted their pay expectations to reflect this decrease,” ADP chief economist Nela Richardson said in a press release about the study’s findings. “For that reason, some workers might still expect higher pay than is warranted by current economic or business fundamentals.”
The ADP study also found that workers generally overestimated the pay increases they would receive.
According to the study, 77 percent of workers expected a pay increase in the next 12 months, 20 percent did not expect a change, and three percent expected a pay cut.
Despite the high inflation experienced in the U.S. between 2021 and 2024 coupled with interest rates that have more than doubled, unemployment has not increased and the economy has remained stronger than expected.
Still, consumers are feeling the pinch of prices on the items they need and want rising higher than their salaries.
The Bureau of Labor Statistics reported that the U.S. dollar lost 7.4 percent of its purchasing power between 2021 and the end of 2022.
In addition, the National Bureau of Economic Research pointed out in a study by a former Treasury Secretary that until 1983, the CPI included interest rates in its inflation calculations. Taking higher interest rates into account, inflation in 2022 was more like 18 percent and is still around 8 percent, according to the group.
And common measures of inflation such as the Consumer Price Index exclude food and gas, two categories that have seen some of the worst inflation. The USDA reported that food prices have increased 25 percent since 2020, and gas prices went from $2.44 on average the month before COVID-19 hit to $3.60 in May 2024—a 32 percent increase.
These numbers show why many workers think a larger pay increase is warranted.
Business owners are not necessarily averse to pay increases, but they may not be able to match workers’ expectations.
Jake Kearney, who owns The Frosted Luau in Henderson, Tennessee, told NTD News via Facebook that he lives by the philosophy, “Take care of your employees and they will take care of you. Always give them an annual raise.”
In the ADP study, the average raise in the last 12 months was 4 percent, which was below workers’ expectations. However, it was close to the annual inflation number, at least in the U.S.
Twelve percent of the workers in the study were remote, while 55 percent were on-site, and the rest were hybrid.
The shift toward remote and hybrid work during the pandemic has stuck, at least for some jobs, and may have contributed to a slight decrease in workers’ reported stress levels at work.
ADP also found that five generations are now in the workforce simultaneously: the silent generation (79 and up, but mostly retired), baby boomers (60-78), Generation X (45-59), Millennials (29-44), and Gen Z (13-28).
“The pandemic left a permanent imprint on the world of work, forcing change big and small on long-standing practices. Now comes a new wave of challenges, with demographic shifts and new technologies reshaping work in real time,” Ms. Richardson said. “While global employment has stabilized, worker sentiment continues to shift in this fast-moving environment.”