ERC survey projects 2015 raises in 3% range

Companies are taking a hard look at the latest wage and salary adjustment survey prepared by the Employers Resource Council in Highland Heights as they decide on next year’s pay raises in a still-challenging regional economy.The 145 organizations included in the survey are projecting base pay hikes next year that average 2.9%. The raises range from 2.7% for unionized production workers to 3% for supervisory, management and professional positions.The projections did not vary significantly for manufacturing and non-manufacturing firms, or for large and small companies measured by the number of employees.The annual ERC survey is used by its members to gauge the local labor market when it comes to employee compensation, although each company’s approach to compensation may be different depending on business factors, according to Margaret Brinich, ERC manager of surveys and research. ERC has 1,100 members.

“Companies can use the survey to be competitive in paying employees,” Brinich said. She said survey respondents are representative of the Northeast Ohio economy, which provides an advantage over national surveys.

In recent years, actual base pay increases have matched projections. Prior to the economic downturn, it was common for companies to raise pay by amounts that exceeded initial projections.

Actual increases this year averaged 2.9%, ERC reports. The survey deals only with base pay and does not include bonuses or merit pay.

Almost all of the organizations contacted said they would provide pay increases for at least some job categories next year. There are some organizations, however, that plan to freeze base pay for some employees. For example, 14% of those contacted said there would be no executive base pay increases in 2015. This is down from 16% in last year’s survey.

The pay projections are used as a general guide by leaders of diverse organizations, including Steve Peplin, CEO of metalworking company Talan Products Inc. in Cleveland, and Chuck Keiper, executive director of the Northeast Ohio Public Energy Council.

Peplin said Talan’s compensation strategy is aimed at attracting motivated workers in a highly competitive metalworking industry that requires strict cost control. Talan does not have an automatic cost-of-living increase, but it calculates pay raises based on many factors. The company also has in place a profit-sharing plan, with payouts determined at the end of the year.

He said business at the 55-employee manufacturer is strong.

“We will be at the top end of the ERC survey,” Peplin said.

Keiper, of Solon-based NOPEC, said the seven-employee organization, which markets energy to consumers and negotiates fees with energy suppliers, is carefully studying the survey results. NOPEC has added four staff members in the last year or so, and Keiper said the organization’s business is on the upswing.

He said he must still strike a balance between a fair pay hike that will help him retain his staff while dealing with budget constraints and growing competition in his industry.

“It isn’t likely that the pay raises will exceed 2%,” Keiper said.


‘Slack’ economy constrains wages

Brinich said the survey is especially helpful during periods when the economy is improving or expanding, when retaining the best workers may require more competitive pay.However, national surveys this year have concluded that there is little upward pressure on wages, with the exception of the oil and gas industry. National surveys are projecting base pay hikes in 2015 at an average of 3%.Local economist Jack Kleinhenz has described the job market as patchy.“At the national level, some of the faster growing industries are energy and technology. We have some of both but not as concentrated as other regions,” Kleinhenz said. He added that “there is slack in the economy and thus modest wage growth.”

National experts point to 4% wage growth in oil and gas. But most of the gains tied to Ohio’s Utica shale development have so far been concentrated in the eight counties along the eastern border with Pennsylvania.

New York management consulting firm the Hay Group cites lower projected wage increases in the hospital industry. Hay Group projects 2% increases next year for hospital workers.

Heather Phillips, senior director of corporate communications for the Cleveland Clinic, Northeast Ohio’s largest employer, said, “We are currently in our budgeting process for 2015 and haven’t make any decisions regarding this yet.”

The tepid economic recovery cited by consultants such as the Hay Group is evident locally. Although the numbers have improved since the bottom of the business cycle, total private-sector employment in Cuyahoga County stood at 624,283 in the fourth quarter last year, down slightly from the 627,688 in the fourth quarter of 2008, according to the Ohio Department of Job and Family Services.