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At D.C.’s largest organizations, the biggest raises go to those at the top

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Salaries for top executives at some of the Washington area’s largest organizations this year are set to rise at twice the pace of that for rank-and-file employees, according to a new survey of the region’s employers.

Pay for top managers is projected to increase 7.6 percent even before lucrative stock options were factored in, a boost that would significantly exceed the 4.1  percent jump recorded in 2015. Employee payrolls overall are only set to rise 3 percent this year.

The data comes from a new analysis conducted by the survey research firm Akron Inc. for the Human Resources Association of the National Capital Area. The association annually canvasses employers throughout the region to find out how much they are setting aside for various job categories. Any changes in pay could mean an organization plans to adjust the salary of a particular employee, or pay a successor more–or less. (Of course, if a vacancy goes unfilled the money may never be spent). This year’s survey covered 228 companies and organizations with an average size of 1,384 employees.

Economists attribute the jump in executive pay to an improving economy and the relatively recent addition of highly skilled tech talent in corporate executive suites. Starting last year, the survey counted new job categories related to technology and cybersecurity that only recently have risen to prominence in corporate America.

Those sorts of high-level technology positions tend to command high salaries because candidates are much in demand, not just at the government information technology and cybersecurity firms that pepper the Washington area but at other companies feeling the heat from hackers or needing to update their operations for the digital age.

But the pay hikes are not being driven just by a change in the makeup of the C-suite. Analysts say it also appears that pay for top executives and managers is outpacing that for other employees generally.

A separate analysis by the association reveals stark inequalities up and down the management chain when jobs are evaluated by function and seniority. Management positions of all sorts are faring better than even the most senior professionals, and raises for entry-level and mid-level professionals saw little or no salary increase, according to the data, which roughly matched the results of surveys from recent years. Indeed,  HRA-NCA said the median annual payroll increase of 3 percent has not budged since the recession.

“It tends to be the top performers that are rewarded the most,” said Angelo Kostopoulos, the chief executive of Akron Inc.. “They are the ones that get the lion’s share of those 3 percent increases, and that story seems to be consistent around the country.”

Laury Sejen, a managing director focusing on compensation at business consulting giant Willis Towers Watson, says the data maintained by Willis Towers Watson show that, nationally, managers and lower-level professionals are much closer together in terms of the raises they get. Her company surveys thousands of employers around the country and found much smaller differences between managers and professionals, she says.

It’s unclear why Washington differs from the rest of the country.

Some say it just boils down to competition for the most experienced people.

“The distribution of that 3 percent is variable and focused on top revenue generators, those areas where the greater competition for talent exists,” said Alan Chvotkin, executive vice president and counsel for the professional services council, a trade association for government contractors. The fiercest competition for talent, he says, “is going to be at the vice president and executive level.”

Others say it has more to do with power dynamics within America’s most successful corporations.

“This is the trend we’ve been seeing in corporate America for decades and it’s a function of worker bargaining power,” said Heather Slavkin Corzo, director of the office of investment at labor union AFL-CIO. “Because workers don’t have the power to push back at this point, there’s no incentive for management to share the wealth.”