Fortunately, we live in a time with more data and information than ever. We’ll help you figure out whether your upcoming pay raise is fair and, if not, what you can do about it.
The Average Annual Pay Raise
Your average annual pay raise depends on several factors. But in general, according to the U.S. Bureau of Labor Statistics, average compensation in the U.S. increased in 2022 by around 4.6%:
5.1% for civilian workers5.5% in private industry3.4% in state and local government
Compensation includes wages, salaries, and benefits; the cost of benefits rose significantly in the past year. Accounting firm BDO measured average payroll budget increases of 4.4%, close to the BLS figure. Another firm said increases were projected at 4.8% across all employee groups, although one-fourth of organizations raised by over 6%, according to Pearl Meyer, an executive compensation consulting firm. Some employers are even giving midyear raises to top performers, while others are providing company-wide raises. The average annual pay raise in 2022 has been much higher than in previous years. Usually, a normal yearly pay raise is around 3%, according to the Society for Human Resource Management.
Factors That Affect Your Pay Raise
Many factors determine whether you get a pay raise, and some are out of your hands. It’s important to understand the following to see if you’ll get a fair raise.
Industry and Occupational Standards
Raises can depend on your industry, employer, or occupation. Here are some 2022 raise examples from BDO:
Education industry: 3.4%Retail and consumer product industries: 5.4%Professional services: 5.86%
Geographic Region
Your raise likely depends on where you live and work. Your pay raise may be higher and considered a cost-of-living increase if you move to a city more expensive than your previous home. Geography influences pay raises worldwide; business analytics firm WTW reported average 2022 salary-increase budgets of 2.9% in Japan, 4.4% in the U.S, and 9.9% in India.
Economic Conditions
Employers handing out raises in 2022 were doing so primarily due to concerns about employee retention (44%), while 30% were concerned about keeping up with inflation’s effects and the higher cost of living. On the other hand, employers may limit pay raises or even compensation itself during recessions or if the company is struggling. Financially strong companies may be more generous with pay raises.
Your Company History and Performance
Companies sometimes offer higher or 10-year-anniversary raises to persuade you to stick with them, to reward your service. Raises are more likely if you have a specialty skill set, are promoted, or otherwise achieve within your role. But if you slack off, employers are less apt to give you a raise.
How To Ask for a Raise
“A lot of people who come to me say things like, ‘Well, during my performance review, I asked for a pay raise. My manager said no, and that’s evil,’” said Lexi Butler, also known as Lexi B., and founder of Sista Circle: Black Women in Tech, a 14,000-strong career support community. “And I always tell folks, as a leader, we can’t just give you pay raises when you ask for them. That’s not how it works. “If you want more money, you have to stop working harder and work smarter,” Butler said. “You need to learn to go fight for your money.” Here’s how.
Start Research Early
Knowledge is power. If you know how much you could be earning elsewhere, collect concrete data points for your manager to bolster your case. Employees anonymously share information about their employers on websites and apps such as Glassdoor and Blind, which are good places to start researching. You also could befriend coworkers to gather this information, which might take a bit more effort in remote work environments. Butler stressed the importance of compensation-related networking for information gathering. “Even though it requires a little more effort, you need to put in the effort,” Butler said.
Ask for a Raise if You’re Underpaid
Pay gaps are a real and systemic problem. If you’re underpaid, take a stand for yourself and everyone else coming after you if you can do so. First, speak with your manager and take notes, Butler said. “Let your manager know you are keenly aware that you are getting paid less. In that same conversation, also say, ‘This is why I deserve the same amount of pay, and/or more.’ " Support groups such as Sista Circle can provide advice for someone in your shoes and serve as your “hype squad” to ask for your proper due. “If you put 14,000 Black women in a room, what if we just share all of that collective information together?” Butler asked. If your manager doesn’t listen to your request, Butler recommended going up the chain and taking it up with Human Resources. “I always tell people that if we have to get to that point, you need to start looking for a new job,” she said.
Documenting Your Worth and Making the Ask
Asking your manager for a raise shouldn’t be the first time they hear about it. Instead, make your intentions known early and often, Butler said, especially in industries such as tech, where the biggest pay raises accompany promotions. She suggested a smart approach:
Find your organization’s chart of position levels, job descriptions, and criteria.Look at the position above you and copy each criteria point into a spreadsheet column.Use the column next to it to track what you’re already doing to meet those criteria.
Butler meets with her manager for regularly-scheduled weekly, monthly, and quarterly chats. Together, they review her job duties and what she could do to meet each of the spreadsheet’s points listed, which she updates weekly. Eventually, Butler said, “I want my promotion. What do I need to do to get my promotion because I think I’ve already done the work? For the past three months, we’ve been talking about it.” If her manager is happy with her work and the company’s in a financial position to award pay raises, “then there’s no reason why my promotion should not be coming. If my promotion does not come, we have a much bigger issue.” At large, bureaucratic companies, there may be a formal process that can take months. “If you ask for a pay raise on Monday, you’re not going to get it by Friday,” Butler said.
The Bottom Line
Sometimes there’s nothing you can do to justify a pay raise with your current employer. If you’ve researched and documented your worth, it’s time to think about jumping ship, Butler said. “‘Now that I’ve done this conversation with you, it’s basically the rehearsal for me to go find somebody who will value this.’”
