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You aren't alone if you feel like you need a raise just to stay on budget. The U.S. Bureau of Labor Statistics reports that real wages—a comparison of changing wages and inflation rates—have decreased in early 2022 compared with last year. With inflation at 7%, you may need at least a 7% raise to keep up.
Asking for a raise may be uncomfortable at times, but there are steps you can take to prepare and support your request.
1. Start the Discussion Early
While you miga want a raise today, timing your ask can be important.
Try to bring up the topic several months before a quarterly or annual performance review. Explain to your supervisor that you're hoping to get a raise and ask what would need to happen to ensure you get one.
The response might depend on factors outside of your control, such as the company's overall success or the team's budget. But your own contributions to the company's well-being could also be a factor. Either way, having an early discussion can make it easier to follow up down the line. If you've done what they've asked for in the interim, then you're simply asking your manager to follow through on their word.
If you don't want to wait and have multiple conversations, still consider the timing. You might want to align your ask with your company's budget cycle or wait until you've done a good job on an important project.
2. Record Your Accomplishments
While some employers offer an annual cost-of-living raise, you might have to make a case for why you deserve a separate raise that rewards your individual accomplishments. Instead of sharing a long list of everything you've done, try to highlight a few times when you really went above and beyond.
Be ready to share what you did, how you did it, and why it was important for your team and the company overall. If your manager needs to ask higher-ups before approving a raise, giving the complete context and results can be helpful.
3. Gather Outside Statistics
Knowing what other people with similar jobs or responsibilities get paid can also help you make your case. If you're underpaid, you might simply ask for an increase to match market standards. Even if you're not, you can use your research and list of accomplishments to explain why you deserve more than the average.
Overall, the average hourly pay increased by about 5% from February 2021 to February 2022, according to the U.S. Bureau of Labor Statistics. But the statistics for your industry, job and location could be very different.
Good places to start your research could include sites like Glassdoor, LinkedIn, PayScale and Salary.com that share anonymized hourly and salary info. A few cities and states also require employers to include salaries when posting jobs. You can use these postings as benchmarks, although you may need to adjust the amount to account for cost-of-living differences in various job locations.
If you want more subjective estimates of what you can earn, you could apply for other jobs and use your offers to negotiate a raise. But if you don't want to let your employer know you're looking elsewhere, an alternative could be reaching out to recruiters and asking how much someone with your experience could expect to earn.
4. Be Specific About What You Want
When you ask for a pay increase, get specific with the request and use your research to back it up. For example, you might find that you consistently exceed expectations in reviews but have a below-market salary. You could make the case that you deserve X% above the market rate.
Also recognize that companies are feeling the strain of inflation and shortages. If a pay increase isn't an option, come up with some alternatives that would make you happy, such as:
- More paid time off
- Flexible hours
- Remote days
- Stock options
- New bonus opportunities
- More interesting assignments
It also may be easier to convince the company to pay for career advancement opportunities than a raise. Having them pay for a career coach or certification program could help you qualify for a higher pay bracket or a higher-paying job later.
5. Have a Backup Plan
You might have tried your hardest and still gotten a no in response. A rejection can be discouraging, but feel out the situation. Was that the final word or part of an ongoing negotiation? If your manager won't budge, it may be time to reevaluate your priorities.
While unemployment rates are low, it's still largely a job seeker's market. Perhaps it's time to update your resume and see if you can negotiate better pay—and potentially a sign-on bonus—at a different company.
How a Raise Could Impact Your Credit
Hopefully, your hard work pays off and you're rewarded with a raise. Your income doesn't directly impact your credit score, and it's not part of your credit report. But it can impact your creditworthiness in several ways.
A higher income can make paying your bills easier and lower your debt-to-income ratio, which creditors may consider when making lending decisions. You could also update your income with your credit card issuers, which might lead to a higher credit limit. In turn, this can lower your credit utilization ratio, which could increase your credit scores.
If you want to track how these changes impact your credit, Experian offers free credit monitoring.