2025 Compensation Insights: Modest Raises and Graduates’ Job Market Challenges

Smaller raises expected in 2025:  

According to the March 2025 Mercer QuickPulse® U.S. Compensation Planning Survey of more than 800 U.S. organizations, employers delivered an average merit increase of 3.2%—the percentage of payroll given to employees as a base salary increase for merit—and a total increase of 3.5%, which encompasses all salary increases, including merit, promotional, cost-of-living, and other adjustments, in 2025. Both figures are calculated based on the total salaries of all employees across companies who responded to the survey, including those who will not receive increases.  These figures reflect a decline from Mercer’s November 2024 projections, where U.S. employers anticipated 3.3% for merit increases and 3.7% for total increases for non-unionized employees. In 2024, the actual merit and total salary increases delivered were 3.3% and 3.6%, respectively, indicating an ongoing decline in annual compensation budgets, suggesting a return to pre-pandemic norms, driven by softening labor market. Source: CCH 5/9/25

Graduates of 2025 have unrealistic expectations of the job market:

ZipRecruiter released its annual grad report, The Graduate Divide: Expectations vs. Reality for the Class of 2025. Based on a dual survey of rising and recent college graduates, the report reveals that graduates’ expectations often clash with reality—especially when it comes to the job search experience, pay, job preferences, and views of the future job market.  Specifically, graduates found the job search took longer than they expected. 82% of rising grads are expecting to start working within three months of graduating, however, only 77% of recent grads accomplished that, and 5% are still searching for their first job. Graduates found salaries didn’t meet expectations, with 42% of recent grads reporting they couldn’t secure the pay they wanted. Rising graduates expect to make six figures ($101,500 on average), but the majority may fall short. The average starting salary for recent grads surveyed was $68,400. Rising grads want jobs with flexibility, but recent grads report they are hard to come by. 90% of rising grads say schedule flexibility is very important to them but according to recent grads, they’ll be hard pressed to land such a role as only 29% report having very flexible jobs. Source: ZipRecruiter 4/23/25

Courtesy of SBAM-approved partner, ASE.

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