Where Did Your Pay Raise Go? It May Have Become a Bonus

A growing preference among employers for one-time awards instead of raises that keep building over time has been quietly transforming the employment landscape for two decades. But it was accelerated by the recession’s intensity, which made employers especially cautious about increasing labor costs.

.. In 2017, one-time payments consumed 12.7 percent to those budgets; raises amounted to just 2.9 percent.

.. “Pressure to increase productivity and minimize costs,” the report concluded, had pushed employers to forgo raises and rely more on short-term awards “as the primary means of rewarding for performance.”

.. In the recession that began a decade ago, the businesses most likely to survive tended to be the most conservative spenders

.. That approach was rewarded and has now been reinforced, he said, helping to restrain the growth of full-time work forces and salaries.

.. The practice of spending more on variable pay than on permanent raises took root in the 1990s, when growing competition from abroad increased pressure on companies to keep a lid on prices and production costs.

.. Pay-for-performance and other bonuses increasingly functioned as a release valve. Companies could offer more money to attract talent or when profits were strong, and pull back when business was slow.

.. The trend toward outsourcing work that was once handled in house as a way of saving money fits in with that story line.

.. Salary increases compound over time, offering greater financial security. Moreover, bonuses have not made up for wage stagnation.

.. The inflation-adjusted median income of men working full time was lower in 2016 than it was in 1973. And their lifetime earnings — which include salary, wages, bonuses and exercised stock options — have mostly dropped since then.

.. Salaried workers, rather than hourly wage earners, remain much more likely to be the recipients of such extra payments.