[US] Reduction in bonus payout frequency and size

In the US, a new payroll data analysis has revealed that bonuses are becoming a less common feature of pay packages, HR Grapevine reports.

The ADP analysis of six years of payroll data covering the period from December 2019 until December 2024. The anonymised sample comprised approximately 12 million workers employed by organisations with 50 or more employees.

Fewer than half of US workers receive a bonus in any given year, and the share has reportedly been steadily dropping since 2021. In 2024, less than 40 per cent of workers received a bonus, a significant fall from the pandemic-era peak.

According to ADP, bonus usage reached its high in 2021, when nearly 44 per cent of workers were awarded one. That increase coincided with widespread labour shortages during the pandemic, when employers relied on higher wages and extra pay to attract and retain staff.

Since that period, bonus coverage has declined across most sectors, although it remains above pre-pandemic levels in several industries.

The median bonus payout for US workers also reportedly fell. Typical bonuses had dropped to $1,786, compared with $1,857 a year earlier. Payouts varied widely, ranging from no bonus at all to as much as $50 million.

At the top and bottom of the distribution, bonuses at the 75th percentile reached $6,500, while those at the 25th percentile stood at $600.

For "job-stayers" - employees who remained with the same employer for at least 12 months - median bonus growth in 2024 was a modest 1.3 per cent compared with the prior year.

Bonuses are paid throughout the calendar year in the US, however, distribution is uneven. Around 13 per cent of bonus recipients receive payouts in December, while 9 per cent are paid in January and another 9 per cent in November, demonstrating the seasonal nature of incentive compensation.

Source: HR Grapevine

In the US, a new payroll data analysis has revealed that bonuses are becoming a less common feature of pay packages, HR Grapevine reports.

The ADP analysis of six years of payroll data covering the period from December 2019 until December 2024. The anonymised sample comprised approximately 12 million workers employed by organisations with 50 or more employees.

Fewer than half of US workers receive a bonus in any given year, and the share has reportedly been steadily dropping since 2021. In 2024, less than 40 per cent of workers received a bonus, a significant fall from the pandemic-era peak.

According to ADP, bonus usage reached its high in 2021, when nearly 44 per cent of workers were awarded one. That increase coincided with widespread labour shortages during the pandemic, when employers relied on higher wages and extra pay to attract and retain staff.

Since that period, bonus coverage has declined across most sectors, although it remains above pre-pandemic levels in several industries.

The median bonus payout for US workers also reportedly fell. Typical bonuses had dropped to $1,786, compared with $1,857 a year earlier. Payouts varied widely, ranging from no bonus at all to as much as $50 million.

At the top and bottom of the distribution, bonuses at the 75th percentile reached $6,500, while those at the 25th percentile stood at $600.

For "job-stayers" - employees who remained with the same employer for at least 12 months - median bonus growth in 2024 was a modest 1.3 per cent compared with the prior year.

Bonuses are paid throughout the calendar year in the US, however, distribution is uneven. Around 13 per cent of bonus recipients receive payouts in December, while 9 per cent are paid in January and another 9 per cent in November, demonstrating the seasonal nature of incentive compensation.

Source: HR Grapevine