Wage growth is slowing as the job market cools, but the tried-and-true holiday bonus appears to be alive and well.

A whopping 96% of professional services companies plan to dole out year-end bonuses, up from 77% in 2021 and 57% last year, according to a survey of about 1,700 financial, information technology, marketing and other white-collar companies this month by staffing firm Robert Half.

Fifty-four percent of the firms polled said they’ll offer a bigger payout than last year while 37% plan to award about the same amount. Bonuses typically average 1% to 10% of an employee’s salary, says Mike Steinitz, Robert Half’s senior executive director.

Although some of the holiday bonuses are merit-based and go to top performers, the majority likely will be disbursed to all or most staffers based on a company’s 2023 financial results, Steinitz says.

Is the job market slowing down?

The survey results are somewhat surprising because the hottest job market on record has lost some steam in 2023 as consumer demand wanes amid still-high inflation and the Federal Reserve’s sharp interest rate hikes to fight it. Also, more Americans sidelined by the pandemic have returned to the labor force as the health crisis eases, helping alleviate widespread worker shortages.

Average monthly job growth has slowed to about 200,000 from 300,000 early this year, Labor Department figures show. Advertised job openings have fallen from a record 12 million in early 2022 to 9.5 million in September. And the number of people quitting jobs – typically to take better-paying ones – has tumbled from 4.5 million to 3.7 million, roughly in line with the pre-pandemic level.

As a result, employers don’t have to work as hard to attract and hold onto workers. Average yearly pay increases have declined from 5.9% last year to 4.1% in October, though that’s still above the 3.3% pre-pandemic average.

Is there a labor shortage in 2023?

Despite the pullback, the job market remains vibrant by historical standards, with many industries still struggling to find workers, Steinitz says. Unemployment has edged higher but is still historically low at 3.9%.

That, he says, is probably why holiday bonuses remain prevalent.

“Companies are concerned about retaining their employees,” Steinitz says.

And a rising share of firms may be looking to offset smaller raises with bonuses, he says.

Another company that closely tracks compensation trends, Salary.com, has a different view. Although the company doesn’t track holiday bonuses, it says 29.8% of companies plan to increase the amount of money they’ve earmarked for 2023 performance-based bonuses overall compared with last year. That’s down from 35.9% in 2021 and 34.1% in 2022 but above the pre-pandemic average.

What is a typical bonus amount?

Also, variable pay, which mostly includes bonuses, is projected to equal 33.9% of executives’ base pay for this year, down from 38.1% in 2022.

Since the job market has slowed, the firms “don’t feel the need to raise the amount” set aside for bonuses, says Andy Miller, managing director of compensation consulting for Salary.com.

It may be that Salary.com’s figures reveal a slowdown in bonuses because the amounts comprise one-third or more of executives’ salaries and about 16% of other manager’s salaries, Miller says. By contrast, he says, Robert Half is capturing holiday bonuses that are likely far smaller, perhaps a few hundred dollars in many cases.

What industry has the biggest bonuses?

Some industries are having a harder time finding workers, or had better financial results this year, and are giving bonuses that equate to a bigger share of employees’ salaries.

Here’s a sampling of the portion of salaries that bonuses amounted to for non-executive managers in 2022, by industry:

Education and government: 9.6%

Leisure and hospitality: 13.1%

Insurance: 14.1%

Financial services: 15.6%

Software and networking: 17.8%

Energy and utilities: 21.2%

Pharmaceuticals: 21.4%