Jeff Robinson, president of PAS, notes that competition was very high for talent in 2022 and 2023, which drove up annual compensation demands. He says management-level employees, in particular, were in very high demand, which helped drive executive increases as well. In recent years, that demand has ebbed and compensation is returning to historic norms.

“Last year, turnover slacked off a little bit and recruiting slacked off,” Robinson says. “All of the things that were forcing those jumps [in compensation] slacked off…. While there’s still turnover, it’s not as extreme and, at the same time, there’s a lot of caution out there.”

PAS data shows that turnover of employees has eased recently, except in high-demand specialty contracting such as mechanical and electrical. Robinson adds that those trades are heavily engaged on the current boom in data center construction. “Without data center work, that 4.5% [average annual increase] might have been more like 4.2%,” he says.

The recent drops in pay increases varies from region to region throughout the U.S. The biggest one-year drop was in the south-central states of Arkansas, Louisiana, New Mexico, Oklahoma and Texas, which decreased from 5.9% in 2024 to 4.4% in 2025.

The plains states of Iowa, Kansas, Missouri and Nebraska had the largest two-year drop—from 5.8% in 2023 to 3.9% in 2025. The southeast also saw a significant drop during that timeframe, falling from 5.8% in 2023 to 4.3% last year. New York and New Jersey have remained the steadiest in recent years, peaking at 5% in 2022 but otherwise remaining between 4.3% and 4.5% since 2021.

While average compensation across the industry may be returning to normal, demand for strong leadership remains high in some sectors. Mark Jones, executive vice president and national sales manager at Kimmel & Associates, says some companies are willing to pay top dollar for the right candidate, especially in the specialty trades and among firms with private equity investors.

“I just turned in a deal where we took a senior vice president from $250,000 [in total compensation] to a $270,000 base salary, plus an expected bonus of around $100,000,” he says. “I think there’s a big delta between average increases with current employees and newly recruited employees.”

Willingness to invest heavily in senior leadership is particularly acute in companies that are backed by private equity, which typically looks for returns on investments in about five to seven years, Jones says.

“I’m doing a search in the Mid-Atlantic for a COO… and one of the hiring parties said, ‘Look, Mark. I’m not going to let $100,000 stand in the way of getting the right candidate,’” he says.

Alan MacNair, founder of MacNair Retained Search, also sees certain sectors that are willing to be more generous with compensation than others, particularly in electrical, mission critical and industrial niches.

While strong offers are available for good candidates, MacNair says companies expect results—and they structure bonuses accordingly. He notes that he’s seen a greater emphasis on bonuses driven by metrics, and less on discretionary factors. Often, bonuses are tied to EBITDA [earnings before interest, taxes, depreciation and amortization], he says.

“I’m looking at an offer now with a base of $525,000 and a bonus that’s based off EBITDA,” MacNair says. “It’s stair-stepped, so with incremental improvements in EBITDA, [the candidate] would receive a bonus between 30% and 100% of base salary.”

Additionally, the recruiter sees signing bonuses and vehicle allowances increasingly being used to close the gap during negotiations. MacNair adds that some offers for company leadership include future payouts if the company is sold at a higher value than when the candidate was hired.

“Base salaries are rising and we still see traditional bonuses, but there can also be a kicker in the event that the company is sold,” he says.