Employee Salary Trends 2025: The Changing Landscape of Pay Raises
For the past decade, it has been generally accepted that workers will boost their pay by switching jobs. According to the Wall Street Journal, that theory has been turned on its head in today’s job market, with salary increases for job stayers and job switchers nearly at parity. Job stayers increased their salary by 4.6% in January and February of 2025, while job switchers only increased their salary by 4.8% in the same period.
With this new data and a job market that is employer-led for the first time in decades, job switching to boost salary is a thing of the past. Instead, employees should look at how they can excel in their current jobs or, if they don’t like their current position, see if they can work with management to make a lateral move to another role. This shift requires a general change in career strategy, emphasizing growth within the company rather than seeking external opportunities, but could lead to financial gains in 2025.
Establishing a Clear Roadmap for Pay Boosts
Another reason employees switch jobs is that there is no clear way to raise their current salaries or get promotions. Employees often cite limited opportunity for upward mobility as a reason to leave their current roles, so employers that can chart a clear path for career growth will be more likely to retain staff. In a 2024 ManpowerGroup survey of more than 12,000 workers worldwide, 34% said they don’t have enough opportunities to achieve their career goals with their current employer. 35% said they considered leaving their current job within six months.
With the economy contracting, upper management may not be amenable to discussing significant raises, but their ears will perk up if raises are tied to performance. Here’s a playbook for switching to a performance-based compensation model backed up with employee productivity data from Prodoscore.
When better perks and salaries are tied to performance proven with objective data, executives find it tough to find a reason not to approve that model. You give up nothing if it is business as usual, only if the employee’s performance directly contributes to growth.
If you develop such a plan and the employee meets their targets, it's crucial not to move the goalposts and provide precisely what you promised. This means setting aside a budget for the agreed-on targets so that the money is there if they meet them. Failure to hold up your end of the deal will result in massive disengagement.
How Employees Can Improve Performance
Only you can determine how your people can meet growth-based targets, but there are many ways for employees to improve in a more general sense.
1. Going the Extra Mile
Putting in more effort could mean reaching out to co-workers to see if they need help, taking more initiative, not waiting for approvals for minor projects if they aren’t required, and digging deeper into tasks instead of merely meeting surface-level requirements.
It should not require extra hours, which will likely lead to burnout. An employee productivity solution like Prodoscore will indicate whether the extra effort pays off and help ensure the employee is not at risk of burnout.
2. Making Personal Development a Focus
Part of your performance-based compensation plan could involve completing professional courses to teach your people the necessary skills to excel in their role, such as leadership training or learning new AI skills. It may be as simple as completing software courses or something more complex like an industry certification.
Whatever it is, tying educational requirements to a compensation plan is a good idea because these new qualifications will give your employees valuable skills for which they deserve to be compensated. It also motivates your employees to feel valued enough that you would spend money on training them, and if you do, it helps create a more employee-centric culture at your business.
3. Showing Loyalty to the Company
When you design your plan, you can tie certain items, such as performance bonuses and education, to length of stay with the company. For example, if you pay $5000.00 for an industry certification, you can require repayment of that amount if the employee leaves within a short timeframe after earning that certification. You’ll want to get HR and your legal team involved to make sure the contract and plan are enforceable in your state, but it isn’t an unreasonable request if you invest a certain amount in your employee.
You should also grant larger increases to employees who have been with the company longer. Offering an automatic 2% increase after an employee has been with the firm for five years, for example, and announcing these in advance to your workforce, will encourage your people to stay.
While it may be an employer’s world at the moment, savvy managers know that the labor market is always changing. Just a few short years ago, there was a labor shortage. Even with AI automating low-level tasks, we’re not nearly at the point where it can replace many jobs. Developing a performance-based compensation plan is a low-stakes way to give your team a straightforward way to get a raise and retain them if the labor market winds shift again.
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