2009 Compensation & Labor Market Predictions

Whew, that a year we just had! Good riddance to 2008!!

To call 2008 an "off" year would be a gross understatement. To hope for a strong recovery in 2009 though, might be called a gross "delusion."

Not that we at Applied HR Strategies (AHRS) don't expect things to improve somewhat; we do, but we're realists too - we expect things to get worse before they level out, and then eventually to slowly get better.

Now that we've blown off a little steam, let's get down to our general predictions for 2009:

2009 Compensation & Economic Predictions:

Merit Pay Budgets: Upper 3% range to 4% in 2008. Down to 3% +/-, depending on industry and circumstances. Some industries will be well below 3%. Comment: if budgets are updated from here, the vast majority will be downward.

Salary Structure Adjustments: Upper 2% to 3%+ range in 2008; 2.5% or so, but with a downward bias in 2009. Same comments as for merit budgets.

Unemployment rates for 2008 (current) and 2009 (projected):
2008: U.S.: 6.7%, WA: 6.4%, Seattle area: 5.4% (November ’08 data)
2009: U.S.: 7% - 9%, WA: 7% - 8.5%, Seattle area: 6% - 7.5%. Comment: nowhere to go but down, at least for the first several months of 2009.

Consumer Spending: Slow growth in early ’08; down mostly in second half. 2009: down early ’09; mixed to down in mid-2009; mixed in late 2009 (but still weak). Comment: flat with 2008 would be a “great” year, based on current trends.

Business Profits: Not bad in early 2008; horrible later in the year. 2009: a bad year all-around. A rebound in late 2009 would be a welcome blessing. Profits and bonuses will be down overall, barring an unexpectedly positive turnaround.

Happy New Year!! Let's hope 2009 will be better than expected!