According to the Labor Department, inflation soared 7% in 2021, the biggest increase in nearly 40 years. But while inflation and prices are increasing at a record pace, I’m guessing your salary didn’t. Fortunately, employees are in a unique position to ask for a raise this year. That’s because high inflation and tight labor markets are expected to continue.
Also, nearly 4 million Americans on average quit their jobs each month last year—mainly for positions with higher pay and greater responsibility. With workers leaving their jobs in record numbers, companies understand that they need to remain competitive.
So, if you’ve been waiting for the opportunity to negotiate a raise, now is the time. Here are some reasons why.
Companies are planning to give raises
Corporations are having trouble hiring and retaining top talent. That’s why companies are setting aside nearly 4% of their payroll budgets for raises in 2022, according to a recent survey of 240 companies from The Conference Board, a New York-based business research nonprofit. Almost 50% of those surveyed said they’re planning raises for current employees to keep pace with the higher pay they’ve awarded new hires. Even Amazon has been struggling to hire and retain corporate workers. To avoid losing employees to the competition, the company recently announced that it would raise the maximum base pay for corporate and tech workers from $160,000 to $350,000.
Workers have more leverage to ask for raises
According to Reuters, monthly job openings are at near historically high levels. Right now, the increased demand for workers is creating a war for talent. That’s why employees are in an ideal position to ask for more and get it. You may also want to consider negotiating for more than just a salary increase. For example, a better job title, more paid time off, and flexible work might be other items to consider putting on the table. Think about your values and priorities and what is most important to you.
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Pay transparency is on the horizon
LinkedIn’s 29 Big Ideas that will change our world in 2022 included the fact that “salary talk will come out of the shadows.” Fierce competition to recruit talented employees combined with a renewed focus on diversity, equity and inclusion (DEI) initiatives will force employers to finally reveal salary and pay information. As the push for equity at work gains momentum, pay transparency will begin to go mainstream, according to Diane Domeyer, a managing director at human resources consultancy Robert Half. Social media has also provided more salary transparency thanks to websites like Glassdoor and PayScale. And, of course, there is no substitute for talking to colleagues or tapping into your extended network.
It’s a competitive labor market which means employees have more leverage over their employers than they have had in decades. Just remember to prepare for your salary discussion, make your case using accomplishments and have a backup plan. If your employer isn’t willing to budge, there is good news. Most people receive a salary increase of anywhere between 10% to 20% when they change jobs. So, strike while the iron is hot. It’s the ideal time to remind your boss just how much value you bring to the organization and that you deserve to be compensated accordingly.