Employers typically give their employees longevity raises to recognize and reward the length of their tenures. Increases in pay may be given annually; they're also awarded when employees reach significant employment anniversaries. A longevity raise differs from a merit raise in that a longevity raise is based solely on length of service, while a merit raise is designed to recognize superior job performance.
Companies usually implement longevity raises to help attract and retain top talent. Human resources managers consider this type of raise as a way to recognize loyalty and to inspire new or potential employees to see that the company values experience and loyalty. Longevity raises may be given along with other raises, such as promotions, cost-of-living increases, pay-for-performance or other raises.
Many public sector employees, including those in the military, education, law enforcement, and state and federal agency administration, count on longevity pay. As an example, most state employees in North Carolina earn a 1.5 percent automatic pay increase after 10 years. It gradually climbs to 4.5 percent after 25 years. The cost is rolled into the state's payroll.
"If we can give longevity pay as a little something to keep folksaround who know what they're doing, we need to do that," said Ardis Watkins, director of legislative affairs for the State Employees Association of North Carolina [source: WRAL.com].
In recent years, however, longevity raises in the public sector have come under scrutiny as incoming revenue decreases and governments tighten their budgets. While unions want to protect these automatic pay increases for its members, others question the wisdom of automatically increasing expenses, especially in difficult economic conditions. Longevity raises are becoming a challenging legal issue, as well: When they're discontinued or phased out, attorneys argue that the employee's expectations or implied benefits from the organization have been violated.
There are signs that recent economic pressures may put an end to longevity raises for good. The Air Force implemented longevity raises to provide incentives for highly skilled senior employees to remain in uniform longer, rather than taking their expertise to the private sector. The Pentagon and White House now believe pay levels and annual pay raises are good enough to keep experienced people in the ranks; they're re-examining longevity raises as a result. Now, longevity raises begin at 26 years of service -- the same point where they previously ended [source: Air Force Times].
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