Boost in paycheck doesn't go far

By Christine L. Romero
Arizona Republic

One thing is sure: Nobody's getting rich off this year's raises.

More Americans got raises this year, but that means little to an individual employee's household budget given all the things eating away at the paycheck.

Workers are being forced to pay for a greater share of rising healthcare costs. Costs for all goods and services are up, shown by the steady rise of the core rate of inflation this year. Energy costs are higher. It's not a pretty picture.

Roughly 87 percent of all workers in the United States will get some increase in pay this year with the average raise projected near 3.5 percent, roughly the same as last year's historic lows, according to the Salary Budget Survey compiled by World at Work, a Scottsdale, Ariz.-based association of benefits and compensation professionals.

The problem with projections is that they are just that. Employers used to meet their projections. But employers participating in the Salary Budget Survey, which encompasses expectations for 12.7 million workers, have ended up handing out less than they said they would in each of the past few years. Blame the economic downturn.

Raises took a noticeable tumble in 2000, when the economy hit the skids. The average increases peaked at 10.5 percent in 1981, when the rate of inflation was about 9 percent. Fairly stagnant wages, increasing healthcare and other costs coupled with inflation worry some like Economist Elise Gould, with Washington, D.C.-based Economic Policy Institute, a liberal think tank.

"Inflation has most definitely gone up. We aren't going to see a decline," Gould said. "There's so much slack in the labor market ... workers don't have bargaining power to bid up wages."