Here’s What to Do If Your Salary Isn’t Keeping Up With Inflation

Inflation is challenging to deal with because even though you may excel at your job, your money just can’t stretch as far as it used to. And employers may not be adjust compensation for the difference in prices.

According to a March 2022 Mercer report, 46% of the 300 companies surveyed did not factor inflation into their salary budgets for the year. Because of this, it may be challenging to ask for a raise during economic crises. If your salary isn’t keeping up with inflation, there are some steps you can take to help you move forward. You’ll need to approach the request creatively since a raise may not be in the budget.

According to the Bureau of Labor Statistics (BLS), the consumer price index (CPI), which measures the prices of goods and services of all items, increased to 9.1% in June 2022. This CPI is the highest it has been since November 1981. Unfortunately, hourly rates have only increased by 5.1% as of June 2022.

Things are even less equitable for those in salaried positions. According to a survey of 300 companies by Pearl Meyer in May 2022, salaries increased by 4.8% year over year in the second quarter.

This gap means wages are not growing enough to compensate for inflation, putting workers in a tough position.

When discussing a raise with your current employer, you can bring up the subject of inflation, but it shouldn’t be your primary focus. According to LHH Recruitment Solutions HR Executive Recruiter Kristin Gupta, It is important to be honest that inflation has put pressure on budgets, but also understand that our companies are dealing with this too. Your employer is more likely to listen to your supporting evidence for a raise if it includes proof about tenure and your performance.

Everyone is being impacted, so you still need to support your argument for a raise with evidence beyond the inflation rate. According to career advisor and leadership coach Melissa McClung, MS, First, prove the value of your work by citing specific examples of times performance has been exemplary and above expectations. Only then would I bring up inflation, cost of living increases, and competitiveness with current market trends.

When you are seeking a pay increase due to inflation, there are a few things that you can do. The steps below can help you figure out the best way to approach your manager about your request, what to do if it doesn’t work, and how to keep everything in perspective.

Dealing with inflation is rough, but there are things that you can consider to help make your situation more manageable as you go through salary negotiations, whether they are successful or not.

Before going into a salary negotiation because of inflation, you need to be prepared for all outcomes as you may not get the result you want. According to Gupta, The first step is to get over the frustration. Sometimes there is not anything that you can do. But, you can respond, you can plan, and maybe come out healthier for it.

Going in with the best intentions and a clear perspective can help you deal with any outcome that comes your way. Even if your request is denied, you can look at alternative solutions.

Don’t jump right into a salary negotiation without preparing first. Inflation alone will not be enough of a reason for your manager to increase your salary. By proving your worth with supporting evidence, you will be in a better position to negotiate a raise.

Look for ways to measure your impact on the business and record these occurrences. McClung recommends setting a recurring time to list accomplishments either every month or every quarter. This practice can save you time later because you will already have a well-documented list to refer to when you begin negotiating.

Once you gather your supporting information, set a time to speak with your manager. According to LHH Recruitment Solutions Senior Talent Specialist Pat Dermody, In any market, it’s important to highlight the value you bring to a team vs. mentioning an economic change such as inflation directly. An employer is more likely to be receptive about a raise request if it’s justified through accomplishments vs. inflation.

Just as with any salary negotiation, you need to make your case for a raise. The economy alone is not reason enough for your boss to raise your salary even though it does have an impact. Remember that the economy is affecting you and your employer as well.

Even if your employer cannot give you a raise, you may be able to leverage other benefits when you look at the whole picture. Companies may be able to make up for inflation by bumping up or adding other benefits.

According to what Gupta has seen in her sector, Most companies are adjusting as much as they can and going toward the higher end of the 3% adjustment, but savvy companies are making up for it in other ways. They are seeing what they can do to help with childcare costs, giving more flexibility (to help with gas prices), or giving gas cards. They are incentivizing some roles that had never been incentivized.

If your company won’t give you a raise, it may be time to look around for other opportunities. According to Dermody, The best time to look for a job is when you have a job, so get your resume in shape if you don’t feel like you’re being valued at the company.

If you deserve a raise and your company isn’t willing to negotiate one, looking outside of your company could provide what you’re looking for in terms of pay and benefits. If you like your job, you can consider options to stay but deal with inflation.

If you have another passion or the time to look at adding more work but don’t want to leave your current position, you can consider supplemental income. Maybe there is something that you have a passion for that you don’t get to do in your current job.

According to Gupta, Your 9-to-5 job doesn’t have to be the only source of income. A lot of people have a side hustle, which helps you to live your passio, but also add to your family income. Your day job does not have to be your entire fulfillment. Take a look at other things that you enjoy doing and where you may be able to make money.

When the cost of living rises, considering where you can tighten your budget is another great option for making your money go further. Gupta suggests hiring a financial advisor or using a budgeting tool to get the full picture of where you’re spending your money.

If you are having difficulty pinning everything down, an advisor or app can help keep you accountable.

There may be something you can cut back on to weather the storm of inflation more effectively. When you know exactly where your money is going, you can adjust to your budget to focus on areas where you need to spend more.