Here's the Raise You Should Seek Amid Spiking Inflation
If you’re seeking a pay raise this year to help balance out prolonged inflationary pressure, rising cost of living or tariff-induced grocery bills, you need to know how much to ask for.
The U.S. inflation rate -- impacted by the Iran war -- is about 3.8%, per the latest CPI data. The obvious solution is to ask for a pay raise of say 4% or so to at least cover inflation. So, if your current salary is $60,000, a 4% raise would be $2,400.
Though this seems pretty straightforward, that’s not always the best strategy, according to many experts.
Explore Next: 5 Side Hustles That Can Generate $1,000 With Under 10 Hours of Work per Month
For You: Start Growing Your Net Worth With Smarter Tracking
Cost of Living Adjustments vs. Merit Raises
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. Cost-of-living raises are often considered an expected annual boost to your paycheck, but that is not always the norm anymore.
Companies today may even disguise what should be considered a cost-of-living bump as a "merit raise" or annual performance-based increase, offering anywhere from 0% for an average or underperforming employee to 3% for the top earners. However, annual raises in the United States typically range from 3% to 5% in general anyway.
So, if you are lucky enough to get an automatic pay pump each year, it won’t necessarily add any money to your bank account, as it will just help you 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, such as a minimum of 10% for standard work performance.
Normally, asking for that high a raise is risky. But these aren’t normal times, as several economic factors are relevant for thinking about salary negotiations right now, such as skyrocketing cost of living and a dramatic increase in gas and grocery costs.
Should You Stay or Should You Go?
When it comes to the statistics of getting paid more for loyalty or finding a new position, many experts are on the fence. Though many would advise that it is easier to find a new job when you still have one, it still could be better for you to quit.
There is no definitive stay or go solution, as it is case by case, but figuring out what that looks like for you will take time and thoughtful consideration. Ultimately, if you don’t think your current position will ever increase your pay to what you feel you are worth, you should prepare to leave.
Getting Paid What You’re Worth
The bottom line is that if you don’t ask, you won’t receive, but 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.
Vance Cariaga contributed to the reporting for this article.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
7 Kirkland Signature Items at Costco Worth Buying This Spring
4 Financial Decisions Young Adults Make That Are Hardest To Undo
