This week starts the holiday season. Soon we’ll be at the end of the year. During this time period companies traditionally offer performance reviews and tell employees if they are getting a salary increase or not. In sectors such as Wall Street, bankers eagerly await their bonus numbers as it’s a significant part of their overall compensation package.
This year, instead of waiting and hoping for a raise, be bold and ask for it. You have a good reason to pitch an increase in pay. Inflation has surged. We’ve all seen higher food prices at the supermarket, the sticker shock of used cars and trucks, cost of gas while fueling up your vehicle or when dining out at a restaurant.
Recent data from the Bureau of Labor Statistics highlights rising costs. The consumer price index in September spiked 5.4% higher this year. The growth was so fast and furious that the U.S. government called for a nearly 6% cost-of-living increase for people on Social Security. This was the largest hike in four decades.
The sad reality is that if you don’t get a raise in 2021, and inflation remains the same or keeps raging higher, you’ll actually see a decrease in pay. This doesn’t mean the company pays you less, it’s that the purchasing power from your salary doesn’t have the same value as it did a year ago. It’s like a race in which you are standing still and everyone is running past you. Each dollar you have is devalued and it takes more money to buy the same products that it did a year or so ago.
Since your salary won’t go nearly as far as it used to, this provides a reasonable excuse to talk to your boss and ask for a cost-of-living salary increase, which should be at least 6% to 10% or more to at least stay even or come out a little ahead. You may need the 10%-plus increase to maintain your standard of living if inflation keeps growing at the rate we’ve been seeing lately.
This request should be made along with a pitch to the boss outlining all the great work you’ve accomplished over the last year. Share with your supervisor all the data, facts and information that highlights your wins. Show how you exceeded expectations. Cite all the achievements, including how you have helped your boss succeed.
Be prepared, your manager may say that the company had to also contend with inflationary costs. She’ll say that inflation may soon end, but your larger salary will last. If you get pushback, provide a counteroffer. This could be still asking for an increase, but if they don’t acquiesce to your demand, propose a retention bonus, stock or stock options. You could also negotiate for non monetary items such as working remotely, four-day workweeks, flexible schedules, enhanced corporate title, more vacation time or an increase in contributions to the company’s retirement plans.
Since businesses are waging a brutal war-for-talent in a tight job market with millions of Americans quitting their jobs every month, the manager may give you what you want. They’ll recognize if you leave, it may take three to six-plus months to find someone else, if they could even secure a replacement. The chances are high that the incumbent will ask for a substantial premium, larger than the amount you are earning. It will be in the best interests of the manager to just pay you the money and keep you at the company.
The Financial Times reported, “A CBS News/YouGov poll out on Sunday showed two-thirds of Americans disapproved of the president’s handling of inflation. Eighty-two per cent of respondents said items they usually buy are “costing more than they did.”
NPR wrote about the problems of an inflationary period, “Public polling has consistently found widespread alarm: Morning Consult, for example, reported this week that 87% of Americans were “concerned about rising prices.”
In a September op-ed penned for the Wall Street Journal, Democratic Senator Joe Manchin, advised against profligate government spending projects as he’s concerned that “An overheating economy has imposed a costly ‘inflation tax’ on every middle- and working-class American.”
This is getting a little in the weeds, but your knowledge about macroeconomic events will impress your boss. She might also use your pitch to ask for more money herself.
Economists claim that inflation is attributable to the pandemic and its aftermath, disruption in the supply chains, the Great Resignation which puts pressure on businesses to increase wages, trillions of dollars pushed into the economy by the U.S. government along with stimulus checks sent to families in an effort to keep the country afloat.
As you can imagine, like everything else, the conversation devolves into partisan politics. The Democrats say that another several trillion dollars is necessary and inflation is “transitory,” meaning it will be short lived. Meanwhile, the Republicans claim it’s pushing the debt burden onto future generations and all the money spent on pet projects will continue to raise inflation.
If you can’t get a raise, here are some other options to deal with the adverse effects of inflation. The stock market most often tends to beat inflation with its rate of return, during an inflationary era. Real estate does well too, so you might want to purchase a home rather than renting. Some say Bitcoin and cryptocurrencies may be a good hedge against inflation.