You probably saw this coming: pay raises were dead on arrival in 2009. Base salaries for non-executive workers only rose by 1.8%. According to Hewitt Associates, a human-resources consultancy, this is the lowest pay increase since data was first tracked in 1976. Overall, 48% of companies didn't raise salaries at all. Hourly workers also took a hit. Pay only increased by 2% compared to 3.6% in 2008.
But it wasn't only the peons who took a hit. Most executives felt the cutback too. Executives only saw a 1.4% pay increase in 2009 compared to a 3.9% increase in 2008.
But as pay raises dropped like deep-sea divers, bonuses stayed afloat and accounted for 12% of salaried payroll and 5.8% of hourly payroll (see table). Hewitt Associates consultant Ken Abosch explains this conundrum by stating in the report, "Even in the toughest economies, companies are willing to reserve money for top-performing employees as a way to reward their performance and ensure they retain these employees after the job market rebounds."
This makes sense. But what doesn't is that the same reasoning is being used by bailed-out Wall Street firms to justify big bonuses. They say that because they've paid back the bailout money it's OK.
I don't buy it. Bonuses were even being paid out by Wall Street in the middle of the financial crisis.
As was brought up in an article in The Washington Times, bonuses are being paid to reward the same high-risk strategies that helped cause the meltdown. In other words, we all took a pay cut and the fat cats made off with the spoils.
Does that make you angry? Write your Congressperson. Who knows, maybe they can hold someone accountable for once. But don't count on it.
--Jens
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