Bosses weren’t exactly doing cartwheels when it came to handing out year-end bonus bundles to employees this past holiday season. Data from payroll company Gusto has revealed that year-end bonuses in 2023 were lower than in previous years, with a decline between 3.8% and 36.2% from 2022, depending on the industry. According to the report, bonuses paid by firms on Gusto’s platform in December averaged $2,145, which is a 21% decline from the $2,730 average in December 2022.

Reasons for Bonus Decline

The decline has been attributed to a less competitive labor market and the high cost of living, which has made employers more cautious about spending. The share of workers who received a bonus has also declined, with 16 of the 22 industries surveyed by Gusto seeing a decline in the number of workers who got a bonus compared to 2022. However, workers in the technology, automotive, and finance sectors were the least affected in terms of shrunken year-end payouts. Transportation and tourism workers were hit the hardest, with a significant drop in their year-end bonus from 2022 to 2023.

According to data from payroll company Gusto, which analyzed data from more than 300,000 clients, the national security or government industry wasn’t called out specifically in the data. But if your company shrunk it’s bonus funds, what will that mean for retention?

Factors Contributing to the Decline in Bonuses and Pay Increases

The market for labor has become less competitive outside of national security, but defense contractors are still desperate for cleared talent to fill their programs. Additionally, the cost of living remains high, potentially making employers more reluctant to spend cash for year-end bonuses.

But now is definitely not the time to be stingy on those retention bonuses.

According to Eric Cormier, the HR hotshot from Insperity, the tides of the economy can sway company decisions on holiday or year-end bonuses. He told the Society for Human Resource Management (SHRM) that during the last holiday season, many organizations were still feeling the jitters of a recession and skipped the bonus hoopla. However, he also thinks bonuses can be a great way to give staff a morale boost, so expect some companies to throw in some extra holiday cheer when the economy is booming.

As always, recruiters and HR personnel should be calculating the cost of an unfilled position on all of their programs. If it’s more than a retention or year-end bonus to leave a position vacant for weeks, months, or even close to a year, fork over the dough.

Stay tuned for our Cleared Recruiting Guide with metrics like the cost of an unfilled position, time to fill, and so much more.


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Katie Helbling is a marketing fanatic that enjoys anything digital, communications, promotions & events. She has 10+ years in the DoD supporting multiple contractors with recruitment strategy, staffing augmentation, marketing, & communications. Favorite type of beer: IPA. Fave hike: the Grouse Grind, Vancouver, BC. Fave social platform: ClearanceJobs! 🇺🇸