DURHAM – Workers expecting their pay increases in 2023 received a rude awakening today. Execs say that pay will increase some 3.3% on average – below the ongoing  surge in inflation, according to the new quarterly CFO Survey.

And some 17% of survey respondents are planning no increase at all in wages.

Looking ahead to 2023, chief financial officers and other executives also sounded warnings about finding workers and dealing with rising costs, report survey authors Duke University and partner Federal reserve Banks of Richmond and Atlanta.

Merit wages at some companies along with a cost of living boost (58%) will help on the inflation front, the survey noted.

Twenty-two percent are offering only merit raises.

Overall, wages are forecast to grow by 3.3% even at firms that include cost of living adjustments.

What impact this size of pay raise remains to be seen, but in another survey more than 60% of employees want raises in an environment where 49% are looking for new jobs.

Executives are fearing pay anxiety with an equal percentage saying workforce challenges and inflation are their biggest concerns (15.8% each) in the CFO survey.

‘Great Resignation’ is worsening: 49% of employees looking for new jobs, survey says

Real wage decline

In analyzing survey data about pay, the authors wrote: “[O]ur results suggest that firms’ most recent compensation increases are well above what they typically offer. However, in many circumstances, they remain below growth in observed price statistics (e.g., the Consumer Price Index) over the last year, suggesting either a continued decline in real wages or at least a less-than-full catch-up to the inflation of the past two years.”

“[T]otal wage adjustments averaged about two percentage points below 2022 growth in the Consumer Price Index (CPI),” the authors added. “Among companies that include an explicit cost-of-living adjustment to wages, this adjustment will average 3.3 percent, in addition to merit increases.”

The survey found that executives expect their costs and product prices to increase 5% and 4% respectively.

“A 3.3 percent inflation adjustment suggests that CFOs expect price pressures to soften somewhat in 2023, but remain above pre-pandemic inflation levels,” said Fuqua professor John Graham, academic director of the survey, about the report. “Inflation remains the top worry of CFOs, alongside availability and quality of labor, followed by tightening monetary policy. This list of challenges is causing CFOs to be pessimistic about the overall economy in 2023.”

Overall view of economy positive

Overall, more than half of those survey remain optimistic about the economy and two thirds say rising interest rates have not affected spending.

But if rates keep rising …

“Nearly 40 percent say they either have already curtailed spending plans or would curtail spending should interest rates increase by another two percentage points,” the survey says.

More information and complete survey results as well as analysis can be found at www.cfosurvey.org.