Salaries up in metro Detroit compared with other U.S. cities

Salaries rose more this year in Metro Detroit than on average nationally, according to a survey by Illinois-based human resources group Aon Hewitt.

A nationwide survey of 1,305 companies included about 20 Southeast Michigan companies, mainly from the automotive, energy, financial and manufacturing sectors in Wayne, Macomb and Oakland counties, said Ken Abosch, compensation marketing, strategy and development leader at Aon Hewitt.

Salaries among exempt workers in Metropolitan Detroit rose 3 percent on average in 2012, fifth highest among 15 major American cities, according to the survey. Exempt workers are nonexecutive salaried employees without a requirement for overtime pay. The national average was 2.8 percent; the largest average increase was in Kansas City, at 3.4 percent.

“Three percent is the new 4 percent,” Abosch said, adding that prior to the recession, a 4 percent annual increase in fixed salaries nationwide was the norm.

In 2011, Metro Detroit was tied for second in the same category at 2.9 percent, behind only Houston.

The recovery in the automotive industry is a big reason for Metro Detroit’s spot in the top five the past two years, Abosch said.

Dana Davis, president of the Human Resources Association of Greater Detroit and a human resources manager for Phillips Service Industries Inc., said that when the economy faltered, a lot of people left Detroit for opportunities elsewhere.

“Now we are starting to see people wanting to come back home, and to do that, you have to pay them a little more,” she said.

When economies start to improve, the star employees get courted more often by competitors, she said, which gives employees more room to negotiate raises.

Detroit executive salaries increased by 3.4 percent this year compared with the national average of 2.9 percent.

The survey also tracked changes in variable rate pay, such as bonuses or commissions, on a national level and found that the funding for variable rate pay in companies’ payroll increased to 12 percent for salaried exempt workers.

Companies are continuing to hold down fixed costs by increasing incentive-based pay, Abosch said, adding that variable rate pay in the 1990s was around 4 percent of payroll.

Aon Hewitt expects that number to near 16 percent by 2020.