By Heather Brown

MINNEAPOLIS (WCCO) – Most of us will never see a raise of 25 percent in one year, but that’s what happening for some Minnesota commissioners. Gov. Mark Dayton said he needs to give higher salaries to retain good leaders.

So, when it comes to the rest of us, what is a typical raise? Good Question.

“Other than people in very high positions, not a lot of people are getting real rich with what they’re doing these days,” said Mick Sheppeck, a professor of management at the University of St. Thomas School of Business. “If you get 4 percent, you’re in pretty good shape.”

For salaried workers over the past 30 years, raises haven’t changed much. According to the Mercer 2014/2015 US Compensation Planning Survey, the average pay raise is expected to be 3 percent this year. That’s up from 2.9 percent in 2014. It’s the highest level since 2008, when the average for salaried exempt employees was 3.7 percent.

The average annual cost-of-living increase is just under 2 percent. Sheppeck says the research shows most people don’t think a 3 to 4 percent increase is enough, but are more likely to feel rewarded with a 6 to 8 percent raise.

“The notion that a little increase is meaningful — the bulk of the research says, ‘No, that’s not true,'” he said.

The type of industry also matters.  According to Aon Hewitt the energy/oil/gas sector is expected to see the highest pay raises of 3.8 percent, followed by real estate at 3.4 percent. Education and government are at the bottom at 2.6 percent.

Performance also makes a difference in pay.  Top performers got a bump of 4.8 percent in 2014 compared with the lowest performers, whose pay increased by 0.1 percent.

“The theory is you do a great job, you get a bunch of money, and someone who does a poor job, you don’t get anything,” Sheppeck said. “But it doesn’t work that way in reality. Companies get nervous. They don’t want to deal with the low-performing employee.”

So, instead of giving bigger raises, Sheppeck said companies are giving extra perks to their top employees.

Heather Brown

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