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Quick Hits: No Raises for Those Few Still Employed

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Brief scrutiny of today's headlines.

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Thinking of a fat pay raise? Think again.

As recently as October, many employers believed their budgets could handle annual pay increases of about 3.6%, down from 3.8% in July.

Now, thanks to the economic crunch, many employers have trimmed next year's planned increases to about 2.5%.

Hewitt Associates (HEW), a provider of personnel consulting and outsourcing services, expects some pay hikes to shrink even further as the economic downturn deepens.

That's a sign companies are concerned about fixed costs and are responding to falling income, or at least the prospect of a smaller top line.

This plays out against job cuts in a range of industries and rising unemployment. Smaller pay increases are likely to leave many workers feeling pinched - and that almost certainly translates into continued weakness in retail sales. That, in turn, means a generally sour economy, because consumer spending represents about two-thirds of the nation's gross domestic product.

Hewitt polled 640 US employers with about 13.5 million employees. About 25% of the companies said they were considering further changes in salaries for 2009, about 50% said they'd already slashed their salary budgets.

The result: the average annual merit boost for blue collar workers is expected to be 2.6% with 2.5% for white collar workers and 2.2% for executives. That's below the 3.1% increase employers reported making after the September 11, 2001, terrorist attacks in New York and Washington and the smallest boost since 1976.

But cheer up, you've got a job - at least for now.
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