After a prolonged period of job gains and wage increases, employers capped off the year by giving their employees bigger year-end bonuses, a new report found.
The average bonus awarded in December was $2,503, on average, up from $2,447 in 2023 — an increase of just over 2%, according to an exclusive look at data from human resource provider Gusto, based on more than 400,000 small- to medium-sized businesses nationwide.
“The average represents about one paycheck. That turns into a pretty significant amount of money especially at the end of the year,” said Gusto’s senior economist, Nich Tremper.
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“This is an economy that ended 2024 much better than expected and small businesses are taking advantage of that — that includes wages and compensation for the current employees,” Tremper said.
Sectors that saw bigger, or smaller, bonuses
But bonuses also varied by industry, Gusto found: The average end-of-year bonus increased significantly among several white-collar industries, including communications, technology and professional services.
Adam Beasley, owner of Adam Up Accounting firm in Payson, Utah, said he determines bonuses for his staff based on the prior year’s profitability. “We were up another 8% in 2024, so the bonus was bigger.”
Beasley, who does accounting work for other small business owners, said he feels even more optimistic about 2025. “I take care of a lot of blue-collar companies — plumbers, electricians, guys putting in infrastructure — and a lot of them are doing well because there’s still a lot of work to get done.”
Meanwhile, many service industry workers saw smaller end-of-year bonuses in 2024 compared with the end of 2023, Gusto found. Sectors such as transportation and warehousing faced reduced demand, leading to significant declines in year-end bonuses for workers in these trades, according to Tremper.
Overall, the jobs market remained remarkably strong throughout 2024, other reports show. Employment grew each month and, as of the latest reading, the unemployment rate edged down to 4.1% in December. Average hourly earnings also increased 0.3% last month.
In a tight labor market, some employers use bonuses as a tool to keep their top performers engaged, with fewer companies paying out bonuses to the entire staff, Tremper said. The share of workers receiving a bonus declined in 2024 by almost 2% compared with 2023.
Money is key, but so is work-life balance
“The key thing is that companies need to remain competitive,” said Michelle Reisdorf, district president at Robert Half, a recruitment and staffing firm. “Bonuses are that extra perk that employees look for when deciding whether to stay in a job or look for a new job.”
According to Robert Half’s survey of more than 1,600 hiring managers in November, 62% of managers said bonuses were higher in 2024 compared with the year before and 28% offered bonuses in line with 2023. Only about 5% of managers said bonuses were smaller than they were previously.
For workers, “money always ranks near the top in perks,” Reisdorf said. However, priorities have also shifted, largely since the pandemic. These days, employees are more likely to consider work-life balance, flexible hours and mental health support as equally important.
To that end, workers increasingly value flexible or hybrid work schedules, extra paid days off, additional options for health insurance or more robust retirement saving plans, Reisdorf said: “The key one is flexibility.”
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