Personal Finance

Asking for a raise? If you do, expect about a $2,400 bump in pay

By August 13, 2019 No Comments

Even with the jobless rate at 3.7%, near a 50-year low, you may have to speak up if you want to get a raise in the year ahead.

Wage growth has been sluggish throughout the economic expansion, only recently breaking 3%, despite low unemployment and a tight labor market.

Still, most of those gains have gone to the highest-paid employees, according to the Pew Research Center. For most U.S. workers, real wages have barely budged in decades, Pew found.

Next year promises to be no different. U.S. employers plan to hold the line on pay raises in 2020, according to a new report by Willis Towers Watson, a benefits consulting firm.

“Most employers are either not willing or fiscally unable to increase their fixed costs across the board by bolstering their salary budgets,” said Catherine Hartmann, the North America rewards leader at Willis Towers Watson. “Instead, many companies are doubling down on providing significantly larger market adjustments to employees in high-skill roles and selective pay raises to their top performers.”

However, employers are increasingly exploring other types of incentives “outside the traditional merit increase,” including flexible schedules, sabbatical programs, parental leave and unlimited paid time off, Hartmann said.

When it comes to cold, hard cash, it’s often up to employees to take the initiative, experts say — and that’s where most workers struggle.

“They might be fearful or they might not be in an atmosphere where that’s encouraged,” Hartmann said.

Despite the anxiety around asking for a raise, about 81% of employees successfully negotiated a pay increase at their current job, according to a separate report by Zoro, an online retailer of industrial supplies and business products.

Salaried employees received an additional $2,370 on average to their annual pay with their most recent raise, while hourly workers got $1.60 added to their rate, or the equivalent of $3,328 more a year, based on a 40-hour workweek, Zoro found.

Of those denied an increase, over one-third of employees started looking for a new job and 29% quit.

More from Personal Finance:
Employers are hiring, but don’t expect a bigger paycheck
Here’s how to ask for a raise
Here’s how to get the job you really want

In fact, changing jobs is still a better way to give your income a boost, particularly in the face of stagnant wages.

People who switched jobs saw their wages rise nearly 4%, versus 3% for workers who stayed in the same job, according to an analysis of wage data from the Federal Reserve Bank of Atlanta.

Willis Towers Watson surveyed more than 850 companies from a cross section of industries between April and July. Zoro polled nearly 1,000 people who at least attempted to get a raise at their current job, regardless of whether their efforts were successful.

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