If you’re seeking apay raisethis year to help balance out prolonged inflationary pressure, here’s the good news: While inflation remains high, unemployment is historically low. This means employers are desperate to find and keep good workers, which gives you more bargaining power.
The tricky part is figuring out how much to ask for. The U.S. inflation rate was posted at about 6.4% year-over-year as of January 2023, per the latest CPI data. The obvious solution is to ask for a pay raise of 6.5% or so to at least stay even with inflation, but that’s not always the best strategy, experts say.
Your first order of business should be to research pay rates not only for your specific industry and job, but also average pay raises across all industries. Traditionally, employers base raises on job performance rather than cost-of-living considerations, according to former Amazon recruiter Lindsay Mustain.
“Companies today often disguise what should be considered a [cost-of-living adjustment] as a ‘merit raise’ or annual performance-based increase, offering anywhere from 0% for an average or underperforming employee to 3% for the absolute rockstar on the team,” Mustain told Well + Good.
But raises have gone well beyond those numbers over the past year or so, mainly because employers are competing for a limited number of workers amid the Great Resignation. People who kept the same jobs in 2021 saw an average salary increase of 5.9%, Well + Good reported, citing a workforce survey conducted by ADP.
While those average raises are the highest in nearly a decade, they aren’t nearly high enough to keep pace with inflation. To ensure that your raise results in real wage growth, you might consider asking for a bump in pay that outpaces inflation. Mustain recommends asking for a minimum of 10% for standard work performances.
Normally, asking for that high a raise is risky. But these aren’t normal times.
“There are a number of economic factors that are relevant for thinking about salary negotiations right now,” Linda Babco*ck, an economics professor at Carnegie Mellon University, told CNN Business.
One of those factors is the labor shortage, which has resulted in nearly two jobs available for every job seeker. This has given workers “a lot more bargaining power than they have traditionally had in softer labor markets,” Babco*ck said.
That bargaining power has resulted in higher-than-average salary increases for workers who have left one job for another. During the first quarter of 2022, job-switchers saw their pay increase by an average of 8.7% year-over-year, while wages for job holders went up by 6%, ADP chief economist Nela Richardson told CNBC.
You might consider asking for a raise that aligns with what job switchers have received rather than what job holders have received. In this case, you can use the current inflation rate as a base for your request, then ask for a little additional money tied to your job performance.
Even if you don’t get the raise you want, experts suggest asking for other perks such as bonuses or flexible work arrangements that can help you save money. For example, working from home part of the time can cut down on commuting costs — a huge consideration during an era of record-high gas prices — as well as on things like dining out for lunch or grabbing a quick bagel and coffee on the way to work.
You might also ask for a work-from-home stipend to cover any additional costs tied to setting up a home office, Babco*ck said.
How to Ask Your Boss for a Raise: 5 Tips for Success
Asking for a raise can be intimidating. Here are five tips and other suggestions that will help you approach your boss confidently and professionally.
Most people cringe at the thought of asking their boss for a pay raise. If your company doesn’t do regular annual salary increases and you’re not up for a promotion, asking may be the only way to get the raise you know you deserve. You should understand that it is perfectly acceptable to ask for a raise, and most company managers and business owners want to take good care of their employees.
While the process seems intimidating and uncomfortable, it doesn’t have to be, especially if you know your boss. If you do your research and are ready with facts, you will feel more confident initiating the conversation.
Why do you want a raise?
This is the critical question to answer. List all of your reasons for wanting a raise before proceeding with your request. Don’t ask for higher pay because your rent went up or you’re frustrated because your cubicle partner doesn’t work as hard as you and earns the same pay rate.
When you make your request, your reasons should be based on your performance and the value you bring to the team and to the organization.
How much should you ask for?
The average pay raise is 3%. A good pay raise ranges from 4.5% to 5%, and anything more than that is considered exceptional. Depending on the reasons you cite for a pay raise and the length of time that has passed since your last raise, you could request a raise in the 10% to 20% range. However, the higher the percentage you request, the better your reasons should be. For instance, if you accepted a position with little travel and now you are on the road more than half the time, asking for 20% isn’t unreasonable because your duties have significantly changed.
However, if you are asking for a pay increase because it’s been more than a year since your last one and you’ve continued to perform well in your regular duties, start with a more reasonable percentage. You still deserve a raise, but you need to temper your request with the reality of your contributions.
When is a good time to ask for a raise?
Some people say there is never a perfect time to ask for a raise, but use common sense. Don’t ask for a raise at a sensitive time, such as if your company has laid people off, your department had low numbers for the quarter, or your boss is dealing with a difficult personal situation.
Consider your company’s current pay increase practices. If they typically give out raises on the first of the year, approach your boss in November or December. This way, you’ll give them an opportunity to consider your request and work with their bosses, rather than asking them to change their decision after you’ve found out your rate increase.
If there is no standard practice for raises, try to make your request during a “good” time, such as when you know your boss is pleased with your work, during a successful quarter, or a time of year when everyone isn’t stressed out.
How to ask your boss for a raise
Give yourself time to prepare for the conversation, and give your manager time to consider your request.
Schedule a meeting with your boss in advance instead of knocking on their door and springing your request on them; this shows that you are considerate of their time. If your boss is busy on a certain day of the week, scratch that day off your list.
Once you have scheduled the meeting, treat your prep like a college research report: Find credible information and cover the following points in your salary negotiation.
The best way to ask for a raise is to do your research and know your worth, then approach your boss in a professional manner. Here are five tips on how to ask for your raise successfully.
Tips for asking for a raise
1. List your accomplishments from the past six months, the past year and your time with the company.
Describe how your accomplishments have positively impacted your department and company as a whole – and provide specific numbers and statistics if possible. For example, you could say, “In the past year, I generated 5,000 leads for the company, which is an increase of 8% from the prior year. The resulting sales equaled $58,000 in new business.”
It’s hard for any manager to turn down a request when presented with numbers like those. The stronger the data you provide, the greater case you make for a well-deserved raise.
Showing the work you have done for the company and the efforts you have put in to help it also demonstrates that you are a loyal worker.Loyal employees gain trust from their employers, which will help your case.
2. Know what a competitive salary looks like for your position.
On sites likeSalary.comandPayScale, you can get a free salary report to see how your current salary compares to similar positions elsewhere.LinkedIn is a great resourcefor this, too. You can either review job posts on the site or use LinkedIn’s own average salary ranges listed on job posts. Consider the industry you are based in, your employer’s size and your benefits. Some companies just don’t pay well, which is why it’s best to consult hiring experts when possible. If you have any connections with local recruiters and hiring managers (perhaps on LinkedIn), ask them if they would look at your resume to provide you with a realistic salary goal for your position and experience.
3. Let your boss know what’s in it for them.
Keep in mind that your boss does not care about your mortgage payments or the vacation you want to go on. Your boss cares about what’s in it for them. You’ve already explained what you’ve done for the company, but you also want to explain your plan for the future. Present them with your goals, how those objectives benefit the company and how you will achieve them.
4. Be confident.
Be confident when asking for a raise. Yes, it’s intimidating, but you have supporting evidence: the reasons you identified for your request and the research you did about comparable salary ranges. Be prepared for some pushback and know that the answer could be no. If you are given the raise, be prepared to continue working hard (or harder). You knew you should get a raise; now show your boss you deserved it.
5. Provide your request in writing.
Chances are, your boss has a boss with whom they will need to share your pay or salary raise request. Provide them a handout that summarizes your request, comparable pay ranges and the benefits the company derives from your efforts.
After the request
It is unlikely your boss will say yes during that first meeting. In most cases, they will ask for time to discuss your request with other decision-makers and get back to you. It is appropriate to ask for a time frame for when a decision will be made. For example, you could ask, “Is it OK if I check back with you two weeks from today if I haven’t heard anything?”
Next, be prepared for a no. A negative response could be based on factors you know nothing about or have no control over. If that happens, ask what you can do to be considered for a pay raise in the future. A good boss will give you the reasons for the rejection and tell you how you can improve your chances for better compensation in the future.
If you are unsatisfied with the reasons why a raise isn’t feasible or with the path proposed to receive more compensation, it’s time to assess your career path and your desire to stay with the company or firm. In the meantime, stay positive.
If you get a yes, maintain your professionalism. Express your gratitude and keep up the good work. It’s also important to maintain good relationships with your co-workers. If you brag to others about your pay raise, your boss will regret helping you, and you will create friction within your team.
Requesting a pay raise can be stressful and uncomfortable, but you have nothing to lose by trying.
