As 2024 came to a close, employers offered larger year-end bonuses, but fewer workers received them, according to a new report by human resource provider Gusto. The average bonus rose to $2,503, up slightly from $2,447 in 2023, reflecting a 2% increase.
“This is an economy that ended 2024 much better than expected,” said Nich Tremper, Gusto’s senior economist. “Small businesses are taking advantage of that — including wages and compensation for current employees.”
Industry Trends in Year-End Bonuses
White-Collar Workers See Bigger Bonuses
Bonuses increased notably in industries like communications, technology, and professional services. Adam Beasley, owner of Adam Up Accounting in Utah, explained that his firm’s 8% growth in 2024 enabled him to provide higher bonuses for his staff. “The bonus was bigger because our year was better,” Beasley shared.
Service Industry Faces Declines
In contrast, service sectors such as transportation and warehousing experienced smaller bonuses, attributed to reduced demand. Tremper noted that these shifts reflect the uneven recovery across industries.
Labor Market Insights and the Role of Bonuses
The labor market remained robust in 2024, with consistent employment growth and an unemployment rate of 4.1% by December. Average hourly earnings also rose 0.3% last month.
Despite the strong job market, the percentage of employees receiving bonuses dropped by nearly 2% in 2024. Tremper pointed out that bonuses are increasingly used to reward top performers rather than being distributed to all employees.
Why Bonuses and Perks Matter
Bonuses play a significant role in retaining talent, said Michelle Reisdorf, district president at recruitment firm Robert Half. In a November survey of 1,600 hiring managers, 62% reported offering higher bonuses in 2024, while only 5% reduced payouts compared to 2023.
“Bonuses are that extra perk employees look for when deciding whether to stay in a job or look for a new one,” Reisdorf explained.
Evolving Employee Priorities
While financial compensation remains important, employees increasingly value benefits like work-life balance, flexible hours, and mental health support. Reisdorf emphasized that flexibility is a top priority, alongside options like hybrid work schedules, extra paid days off, and enhanced retirement plans.
“Employees want more than just money; they want benefits that align with their lives,” Reisdorf noted.
As 2025 approaches, businesses face the challenge of balancing financial rewards with evolving employee needs. Bonuses remain a key motivator, but flexibility and work-life balance are becoming equally essential in attracting and retaining talent.
