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2016 Salary Planning for the Manufacturing Industry

As 2016 approaches, many of you are conducting salary planning.  First and foremost, please note that the change in minimum wage in California to $10 per hour also results in a change in the minimum wage for salaried (exempt) employees.  There is a minimum salary requirement to meet exemption criteria of “twice the minimum wage”.  This means that all your salaried (exempt) employees must have an annual salary equivalent of no less than $41,600.

There is also a plan moving forward to raise the minimum salary for exemption at the federal level under the Fair Labor Standards Act.  The proposal calls for an increase to the exempt minimum wage to $50,440 effective in 2017.  So, all signs point to the final rules being issued sometime in early 2016.

Many of you plan merit increases for 2016.  Competition for well qualified employees is extremely high despite current labor market conditions.  Having competitive compensation and a benefits program is a critical component for being able to attract, motivate, and retain top talent.  Being aware of the labor market’s wages is a critical first step in developing your human resource strategies.

It appears that the market is reflecting an average merit budget of approximately 3.0%.  Some of the data is provided below.  This information is provided to assist you in your planning and to inform you as to the competitive rate for 2016.

THE CONFERENCE BOARD – 3.0%

TOWERS WATSON – 3.0%

AON-HEWITT – 3.0%

ECONOMIC RESEARCH INSTITUTE – 2.5%

WORLD AT WORK –3.1%

SOCIETY FOR HUMAN RESOURCE MANAGEMENT – 3.0%

For more information about compensation and salary planning call Steve Keyzers at 626-217-9000 ext. 121.

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