What to Expect in 2023: Analyzing the Average Merit Increase Trend

As the economy continues to shift and change, keeping an eye on the merit increase trends is important to stay competitive. In 2023, the average merit increase is expected to be slightly higher than in previous years. This is due to increased demand for certain skills, wages, and inflation. It is important to understand the average merit increase trend to be prepared for questions and challenges from your employees. This article will analyze the average merit increase trend and what to expect in 2023. It will also provide tips for staying competitive and maximizing your budgets.

Overview of Merit Increase Trend

The average merit increase trend is the general pattern of average increases given at a certain time. It is important to note that while merit increase trends exist, they are not set in stone. They can change from year to year and, lately, month to month, depending on several factors, such as the economy, supply and demand for certain skills, and inflation. While merit increase trends provide some general insight into what kind of raises employees will expect, it is also important to consider other factors, such as company performance and fiscal situation.

Factors Contributing to the Merit Increase Trend

As the economy changes, there is an increased demand for certain skills. To meet this need, employers often need to increase the wages of those who possess these skills. This wage increase often trickles down to other employees in the same field.  As the economy grows, the average wages tend to rise, and in some cases, companies might even be required to due to certain legislation and regulation. Inflation is a natural increase in the cost of goods, which affects the cost of living and the cost of doing business. This often leads to an increase in wages for employees to maintain their standard of living.  A number of other factors can contribute to the average merit increase trend, including the economy, availability of jobs, and political climate.

What to Expect in 2023

By 2023, the average merit increase trend is expected to be 4.1%. This is a significant increase from the average increase of 3.0% in 2022. While this is an average, the amount employers deliver depends on several factors. People at the entry-level of their careers often receive lower merit increases than senior-level employees. This is because senior employees have a proven track record of success and are less likely to quit than entry-level employees.  The demand for certain skills will also affect the merit increase budgets. If skill sets are in high demand, employers may be more likely to give higher increases. Yet, the company budget is also a significant factor, and other factors that will affect merit increase budgets include the economy, inflation, and legislation.

Maximizing Your Salary Budget

It is important to maximize your salary budget. This can be done by taking note of the talent and skills needed and the current demand for these skills. You can tailor your budget to remain competitive for these positions.  Using technology to manage your manager’s recommendations is necessary to understand the skills, performance, and competitive environment internally and externally.


The average merit increase trend has been slowly increasing since 2010. By 2023, the average increase is expected to be 4.1%. This is due to various factors, including increased demand for certain skills, wages, and inflation. It is important to understand the average merit increase trend to be prepared for salary change. There are several ways to stay competitive in the market for talent. These include staying up-to-date on industry trends, developing employee skills, encouraging your HR team to network, and maximizing your salary budget. By following these tips, you can be confident that you will remain competitive in 2023.


About the Author: Laura Morgan

As a founder and owner of MorganHR, Inc., Laura Morgan has been helping organizations to identify and solve their business problems through the use of innovative HR programs and technology for more than 30 years. Known as a hands-on, people-first HR leader, Laura specializes in the design and implementation of compensation programs as well as programs that support excellence in the areas of performance management, equity, wellness, and more.