"A good rule of thumb in the job market is that pay raises are always better when the labor market is tight. Now a tight labor market means that companies are hiring and the unemployment rate is low. And we have had that situation and should continue to have that situation in 2007," says Dr. Walden, a North Carolina Cooperative Extension specialist.

"In fact you already hear about many companies [having] difficult times hiring in some industries and finding qualified workers," he adds. "So I would expect to see the average pay for the average worker in 2007 actually be about 2 percentage points above the inflation rate, so that will translate into somewhere between 4 and 5 percent pay raise."