The latest inflation reading from the Consumer Price Index came in at 6.8%, the highest year-over-year increase since 1982. While the fourth quarter CPI reading could mark an inflation peak, projected pay increases from employers for next year are only about half the current level of price increases.

Employers had it easy over the past decade. Inflation has lingered between 1% and 2%, while pay raises have increased between 2% and 3% during the same time. But for the first time in several decades, “inflation is an important factor in deciding annual raises,” said Gad Levanon, chief economist at the Conference Board.

This tension between bosses and workers was evident at a meeting between tech giant Google and its employees this week, from which CNBC received audio and video of employees being told that as a rule their raises won’t be matched against the current rate of inflation.

CNBC’s latest All America Economic Survey finds inflation firmly eclipsing Covid as the top concern among the public.

Amid these fears, pay budgets are expected to increase by 3.2% in 2022, according to the Mercer Compensation Planning Survey. Including merit, along with other types of base pay increases such as promotion pay increases, that estimate reaches 3.5%. But even as inflation has continued to increase, Mercer’s outlook is just slightly up from the 3% and 3.3% pay raise projections it forecast in August. And the level of increase over 2021 raises is small — this year came in at 2.8% merit raises and a 3% total increase in pay budgets.

In a tight, and tense, labor market, workers are unionizing to an extent not seen in recent decades and millions of workers are quitting jobs — 4.2 million workers quit their jobs in October, a number that came down slightly from the previous month but left the total number of job openings at 11 million. Quit rates have remained at a 20-year high, and employee expectations are at an all-time high.

Employers have had to increase incentives, pay and opportunities to attract and retain workers, and next year’s round of pay increases will at least be going up.

“In 2021, most company raises were much lower than the increase in the cost of living,” said Levanon. “In 2022, it may be more equal.”

Many companies are monitoring inflation on an ongoing basis, and are making decisions to increase pay more than they previously forecast. Compensation consulting firm Pearl Meyer conducts an annual survey on pay budget expectations. Over the summer, the data showed “low 3%” pay raise projections for 2022, but when the firm started hearing a lot of anecdotal talk about much larger increases and more concern about retaining and attracting new employees, it decided to re-survey companies at the end of November. Half of the companies say they are revisiting their pay budgets for 2022 and are expecting to give higher increases than they originally forecast.

In all, the pay budget forecast increased to 4.2%, “which is higher than the low 3% we’ve seen for 20 years,” said Rebecca Toman, vice president of the survey business unit at Pearl Meyer. Among half of the firms saying they are increasing pay budgets, the average is now up to 5.2%, and 25% said they are planning to give pay increases greater than 6%. “Firms are taking a second look and that’s significant movement,” Toman said.

“While compensation budgets may not rise to the level of employee expectations, they are the highest we’ve seen since the 2008 financial crisis,” said Lauren Mason, senior principal in Mercer’s career business. “These compensation budgets also do not include ‘off cycle’ pay increases that employers have already made throughout the year,” she said, which have been significant in hourly jobs, with 37% of employers saying they have increased minimum wages in 2021. “These minimum wage hikes are being driven by the large employers and therefore represent a larger share of the U.S. workforce,” she added.

Balancing both the tight labor market driving the wage increases and the economic and health uncertainty from successive waves of the Covid virus, and now the omicron variant, most companies are still struggling to attract and retain the workers they need.

That means leaving a job may be the quicker path to a better pay package.

“The reality is that most employees would have no trouble finding a new role,” the authors of Mercer’s survey wrote, “and likely a premium for job switching.”

Quitting jobs and taking advantage of a signing bonus, higher salary and better incentives companies are offering to attract employees is “the best way to do it as a worker,” says Andrew Challenger, senior vice president of outplacement and career transitions firm Challenger, Gray, & Christmas. “Or negotiate with your employer to match competitive wages in this environment where inflation is rising,” Challenger said.

“Many workers switch to other jobs and get a big increase in wages, and in many cases more than the [increase] in cost of living,” Levanon said.

Most economists expect both inflation and wage inflation specifically to continue rising in 2022, Challenger said. But inflation, even if it remains elevated, is expected to moderate eventually. “It doesn’t mean it’s going to be two months, it could be a year. But it is not going to be, you know, 4 or 5% a year for the next five years,” Lawrence Mishel, a distinguished fellow at the Economic Policy Institute, recently told CNBC.

That is a consideration for companies in setting pay raises because once a worker is given higher pay, it is harder to adjust back down in future years as inflation declines. In fact, that level of increase compounds annually.

CEOs, even sitting on record levels of corporate profits, are worried about what’s known as the wage-price spiral, with higher labor market costs feeding into higher inflation across the board. The Fed says it hasn’t seen signs of that yet but it does need to be monitored given the labor market and economy reality.

“Finding employees is still very, very difficult and importantly they are talking about it being widespread, not just simply in one business unit,” Roger Ferguson, former Fed vice chair and distinguished fellow at the Council on Foreign Relations told CNBC’s “Squawk Box” on Friday. “We’re starting to see that this is building into pricing for end product and we’re starting to see just the beginning of something we call the wage-price spiral.”

From the stock market perspective, the more companies pay, the more they may have to give up in margin, and that won’t make shareholders happy.

“Wage inflation is the issue I would focus on,” said Goldman Sachs chief U.S. equity strategist David Kostin, speaking to CNBC on Friday. “It places pressure on some companies on the margin front,” he said, and into 2002 he is leery of companies with a high percentage of their operating cost coming from labor. “That’s a headwind that is going to persist,” he said.

The biggest distinguishing factor in the Pearl Meyer data and among firms that are more aggressively planning to raise wages does come down to privately owned firms versus public companies and non-profits, the latter of which don’t have increased sales or flexibility in annual spending budgets more broadly. Privately held firms are planning the largest raises, and compared to public companies, they don’t face the same level of scrutiny from shareholders. But public companies also may be addressing pay in other ways, including long-term equity and other incentives.

“It is important for employees to keep in mind that pay is not the only investment employers are making in their workforce,” Mason said. “Employers have made significant investments in providing more varied health and well-being benefits throughout the pandemic.”

Mercer’s survey reported that 1 in 4 employers will increase their bonus pools over 10% higher than last year.

“Given the economic uncertainty surrounding the pandemic and the emergence of the omicron variant, employers are turning to variable compensation as another means of increasing employee pay without permanently impacting the cost structure,” Mercer stated.

Many companies, especially those with large lower-wage workforces where wage inflation has been the sharpest, have been adding benefits including free college education as a way to recruit and retain.

Companies also do give special bonuses as a recognition of “extraordinary” circumstances, Toman said.

In fact, Google recently decided to give employees a one-time cash bonus. Unlike a change in base salary which compounds over time, bonus awards and long-term incentives offer employers the option to remain conservative with base salaries but still offer employees more upside. Before making any move based on wages alone, it is important for workers to consider the full compensation picture.

Many factors should cause inflation to moderate over time — even if it remains at a higher level than had been typical over the past decade — from the supply chain kinks being worked out and, in the labor market, specifically, more people going back to work. The current increase in demand for workers and lack of labor supply feeds the wage inflation and Challenger said filling the 11 million open jobs will be one way to help bring inflation down. More people are going back to work. Even with the high level of opening, jobless claims just hit their lowest level in five decades.

But with inflation projected to remain extremely high in the first few months of 2022, it is important to note that annual raises typically occur between January and April, and there may still be more movement among employers to adjust pay to the on-the-ground economic reality. Companies responding to the Pearl Meyer survey told the compensation consultant that they will keep watching the inflation number closely. “We know it’s a major driver of these larger than typical increases,” Toman said. “And we may even see some companies add mid-year increases in 2022 if they find that they are not keeping up,” she said.

Even if the data suggests pay bumps won’t match inflation, Toman said there’s one finding from the compensation world that should make workers happy. Nearly all (99%) of respondents to its survey are planning to give salary increases in 2022. “We don’t usually see that,” Toman said. “And that says a lot too. If you don’t have a salary increase program this year, you’re really behind the mark in 2022.”