Washington employers plan biggest pay raises in nation

Of 25 large metropolitan areas, Washington employers in both the private and public sectors budgeted the largest increase for pay raises, 2.2 percent. Companies in nearby Baltimore budgeted for 1.9 percent raises.

Still, the recession has forced companies to be leaner: The planned raises are only half of last year’s 4 percent increases, according toArizona human resource research group WorldatWork.

Alison Avalos, a research manager for WorldatWork, said the group expected the drop.

“Things fell by about a third from last year,” she said. “Typically, when we have flips in the economy, salaries fall a year after.”

But Washington tends to recover from such drops quickly, she added.

“You find that the recovery is a little quicker in marketplaces with lots of higher-level positions or where the competition is more fierce.”

John Challenger, chief executive of Chicago outplacement firm Challenger, Gray & Christmas, attributed part ofWashington’s strong ranking to a national shift of power from business to government.

“Things are moving from New York, the financial center, to D.C., the government center,” he said.

Additionally, he said, Washington is a mecca for people with strong educational backgrounds and skills.

Comparatively, Detroit tied with San Jose, Calif., for the lowest salary increases of 1.6 percent.

“The primary reason that employers give pay increases is to improve performance, not just to keep up with inflation,” Avalos said. “In an area where many people are losing their jobs or an industry has taken a hit, it is more about being employed and less about pay increases.”

Many of the 25,000 organizations surveyed seem optimistic about next year, Avalos said.

“There’s certainly recovery on the horizon,” she said. “If companies see some cash flow, they will be more optimistic.”