Pay Raises Will Be Slightly Smaller in 1988, Study Shows

A five-year slowdown in pay raises will continue next year, but wages are expected to rise at a faster rate beginning in 1989, a salary survey released Thursday indicated.

The 2,500 firms polled in the survey by the consulting firm of William M. Mercer-Meidinger-Hansen Inc. indicated they will raise pay in 1988 an average 5.3%, compared to 5.4% in 1987. The average includes increases for hourly, salaried and executive employees.

Michael O. McCullough, an associate at the Los Angeles office of William M. Mercer-Meidinger-Hansen, said the good news in the survey was that the differential between actual and projected pay increases in 1987 and 1988 was the smallest in the past three years and thus it was “finally bottoming out.”

He said that was one of two indicators that points to an upswing in pay raises in 1989. He said the consumer price index is moving up again and that increases may take a year to be reflected in pay increases.

For 1988, employers in Los Angeles, Orange and San Diego counties projected slightly higher pay raises than the national average. In Los Angeles County the average pay raise was forecast at 5.5%, compared to 5.6% in 1987.

U.S. and Los Angeles County area industries awarding the biggest 1988 pay hikes--ranging from 6.3% to 5.7%--include the legal, accounting and consulting professions, computer services/software; business and information services, insurance and finance/banking.

SLOWING PAY HIKES

Salary increases Area, participants Actual ’87 Projected ’88 National 5.4% 5.3% 2,500 companies L.A. County 5.6% 5.5% 109 companies Orange County 5.5% 5.3% 52 companies San Diego County 5.7% 5.4% 24 companies

National trend in salary increases, in percent

* Projection

Source: William Mercer-Meidinger-Hansen