Do you feel appropriately compensated at your job? If not, you’re not alone. An overwhelming majority of the American workforce feels underpaid. Paired with external factors like inflation, the average worker feels the pinch now more than ever.
The US inflation rate hit 9.1% in August 2022, and the Consumer Price Index shows a hike across all costs of living, from energy to groceries and everything in between. Despite this, wages remain largely unchanged.
Americans have to pay more without getting paid more, which poses an important question: Can you use inflation to negotiate a raise? We reached out to financial experts to see what they had to say.
Can I Use Inflation As Leverage At Work?
The overwhelming consensus of the financial experts we spoke to was yes, you can—but there are some caveats. Generally speaking, “in the professional ranks, asking for a cost of living (COL) adjustment has not been standard workplace behavior, explains Joe Mullings, chairman and CEO of Mullings Group.
“With that said, the standard has gone out the door since February of 2020,” he continues. The COVID-19 pandemic sparked a wildfire of rent hikes, supply chain issues, and job shake-ups. Kathryn Snapka, finance head and founding partner at Snapka Law Firm, says you can use this to your advantage.
“Workers now have more negotiating power as the labor market experiences record-high churn and new hires. Many Americans are quite concerned about inflation. Many businesses are focusing on retention in order to prevent employees from quitting.”
Great, So I Could—Now, How Can I?
Despite this negotiating power, most of us find asking for a raise to be at least a little awkward. Employ’s 2022 Job Seeker Report found that while 67% of workers feel they deserve higher compensation, only 29% are comfortable negotiating pay raises. That discrepancy reveals a large pool of unhappy employees.
So, how does one get out of this cycle of burnout and resentment without quitting altogether? These financial experts have a few ideas.
1. Crunch The Numbers Yourself
Bringing data to the table considerably strengthens salary negotiations. First, “arm yourself with knowledge about your industry,” says Gareth Hoyle, managing director at Marketing Signals. “You can research the average salary of your particular job title across different job sites such as Glassdoor and LinkedIn.”
When doing so, be sure to adjust the filters to factor in bits such as location, company size, and years of experience.
Make sure you also bring in the numbers on inflation. “Consult the Consumer Price Index to figure out the inflation rate from the past year,” advises Alex Williams, certified financial planner and CEO of FindThisBest. “Take that number in decimal form, add one, and multiply the sum by your existing salary to understand how much of a pay raise you deserve.”
2. Don’t Be Afraid To Brag
“The focus of your negotiations should be on your accomplishments, even while inflation is a topic of conversation,” Snapka says. “The value you give to the firm is something you should always emphasize.”
Snapka suggests saying something like, “I’d love to explore what else I can do in this capacity, but my current income is not keeping up with the levels of inflation. As a result of the X% increase in my living expenses, I would want to see my pay increase in line with this trend so that I may keep developing and achieving new objectives with our company.”
“This is your time to shine,” Hoyle adds. “You will want to provide evidence of all that you’ve accomplished since your time at the company. Here is where you take your boss through the goals you’ve made along with examples of what you’ve done to accomplish them so far.”
3. Practice And Preparation Makes Perfect
Asking for a raise can be nerve-wracking, and there’s no shame in a little practice. “Making a script is beneficial,” Snapka says. “Not reading it word-for-word is the objective. Instead, you should focus on memorizing the important ideas.”
“The discussion might easily veer off topic due to its emotive nature. Knowing and practicing your words will help you control your emotions,” she continues. “You’ll feel as though you’ve already had the chat by the time you arrive at the actual meeting, which will boost your confidence a lot. It may be the most effective negotiation tactic that people ignore.”
4. Consider Other Perks Besides Pay
Part of planning for your negotiation involves coming up with specific numbers—multiple numbers, if possible—and potential solutions outside of money. “Have specific numbers in your head that would be your ‘stretch’ goal, your ‘I’ll take it!’ number, and your ‘ok, it’s a start’ increase,” says Amy Feind Reeves, career coach and author.
Also, you might consider “accepting something other than increased pay as a reward for your performance,” Reeves continues. “Such as work-from-home privileges or extra vacation days. Your manager’s hands could be tied when it comes to the budget.”
5. Keep It Positive
“Approaching your boss with a collaborative mindset is preferable to giving an ultimatum like, ‘pay me 15% more or I’m leaving.’ Be respectful and etiquette-compliant,” Snapka advises. “Recall that individuals, not businesses, engage in negotiations.”
“Your employer and you are speaking. Having your boss speak up for you is your main objective,” Snapka continues. “Understand the rationale behind your boss’ use of internal political resources to increase your pay. Don’t forget that the business is not after you. Your ultimate objective is the same.”
Similarly, “don’t compare yourself to others in the organization, at competitors, or elsewhere in the field,” Reeves adds. “Base your arguments on your own merits. And don’t bring other issues into the discussion (e.g. outside disputes, disgruntlement, slights) as they are all a distraction from the issue at hand.”
6. Most Importantly, Ask
Unfortunately (and probably, fortunately, too), employers can’t read your mind. If you want a pay raise, then you’ll have to ask for one. Most employers won’t go out of their way to pay you more if they feel they don’t have to.
Williams suggests sending an e-mail along these lines to get the ball rolling: “Can we find a day to discuss my current salary? After an abundance of research and analyzing how inflation has impacted my cost of living, I believe an increase in salary is in order. I enjoy this role and see myself long-term at this company. So, finding a solution is important for me. What days and times would work best for you?”
With a little planning and a bit of courage, you could join the lucky few of the American workforce who feel fairly compensated for their work.
More From Suggest