Will you get a raise in 2025? A new Iowa survey says it’s likely

More than 97% of Iowa businesses anticipate raising wages in 2025, but the increases may be less than those doled out a year ago, according to an annual survey released by Palmer Group, a leading Des Moines-based employment agency.

Findings of this year’s 2025 Salary Guide show that a majority of the businesses — 78% — plan on wage increases of 3%-4%, with 14% planning on raises of 1% to 2% and 5% anticipating raises of 5% or more. Only 3% of the businesses surveyed did not plan to give raises in 2025.

The survey also shows businesses have pared back their hiring plans slightly in 2025, with 45% anticipating hiring new staff as compared to 50% a year ago.

While demand for highly skilled and experienced workers is still high, this year’s survey reflects “less chaos” in terms of businesses rapidly ratcheting up wages to attract workers, said Palmer Group Executive Vice President Chris Lorenz.

“There’s less of a bidding war,” Lorenz said. “Companies are concentrating on being who they are and attracting employees who want to work there.”

He said the number of businesses responding to the survey this year was the highest since the company started doing them in 2013. He did not have an exact number for the responses, but say it was “more than 100.”

Pay hikes rise as boomers leave workforce faster than they can be replaced

Wages and salaries have become a focal point for businesses trying to attract workers at a time when Iowa’s labor force is shrinking. Baby boomers continue to retire at a rate faster than the number of young people entering the labor force can replace them. The state’s unemployment rate remains low, at just 2.9%.

Nearly 23,000 workers have left Iowa’s labor force in the last 12 months, Palmer Group Chairman and CEO David Leto noted in the survey report.

“Unemployment rates in Iowa have dropped and are near February 2020 levels,” Leto said. “We are seeing quit rates drop in Iowa and they are now below the US average, which was not the case for the past few years. Due to all of this, skilled and experienced talent is still hard to find, and demand remains strong.”

Workforce participation rate in Iowa remains below historic levels

Iowa’s workforce participation rate was at 66.4% in September, still higher than the 65.5% in August 2020 during the height of the COVID-19 pandemic and the recorded low of 63.1% in January 1976. But Iowa’s workforce participation rate historically has been over 70%, including a high of 72.8% in October 2008, according to U.S. Bureau of Labor Statistics.

While workforce participation has been going down, the total wages and salaries paid in Iowa topped $100 billion for the first time in the second quarter of 2024, according to Federal Reserve Economic Data statistics.

Companies looking to bring more workers back to office fulltime

Companies also are planning to increase the number of employees they are bringing back to the office full-time. Full-time, in-office work is planned for 38%, up from 33% last year. Still, companies also are anticipating more hybrid work accommodations at 32% compared to 25% a year ago. The amount of 100% remote workers was at less than 1% in the survey as compared to 2% fromyear.

The Des Moines metro has seen several office renovations in recent years as companies strive to make workspaces more enticing to employees.

The difficulty in finding new employees is reflected in where companies anticipate their focus to be in 2025. Employee retention at 37% remains the highest priority, but it is down from the 49% in 2024. The biggest shift was companies placing a focus on new technologies which almost doubled to 14% from 8% a year ago.

Who made the most and lest?

The survey also lists salary levels for a variety of different job titles based on experience. Ranking the highest were chief financial officers with top pay coming in at $689,400 for one with a high level of experience. The low was was $32,300 for an entry-level bank teller.

Palmer Group published the 2025 Salary Guide in collaboration with the Greater Des Moines Partnership, Central Iowa Society for Human Resource Management and the Cedar Rapids Metro Economic Alliance.

Kevin Baskins covers jobs and the economy for the Des Moines Register. Reach him at kbaskins@registermedia.com.