It’s not just you: If, lately, you’ve been feeling tight on money without having changed your spending habits, the astronomical inflation rate in this country may be to blame. Over the past 12 months, the consumer price index (CPI) has risen by 8.5 percent, the highest annual increase we’ve seen in four decades, reflecting rising prices for necessities like gas, food, and electricity. And there’s no clear end in sight, either, as economists forecast the spike (to as much as 10 percent) to continue throughout the year, largely due to effects of the ongoing Russian invasion of Ukraine. That reality may leave you with less money to spare—unless your employer offers you a raise, that is. Figuring out how to ask for a raise based on inflation may be simpler than you’d think, though, in this economy.
Experts in This Article
Joe Mullings is the Chairman & CEO of The Mullings Group Companies, including TMG Search, Dragonfly Stories & TMG360 Media. The search firm is responsible for more than 8,000 successful searches in the medtech / healthtech industry with clients ranging from multi-billion-dollar companies to emerging tech startups.
Self-described as a “recruiter gone rogue,” Lindsay Mustain is a best-selling author and formerly the most visible employee of Amazon. Featured in Forbes, The Ladders, Glass Door, and Entrepreneur, Lindsay’s mission is to help driven and high-performing job seekers who are tired of settling for a career that offers only a paycheck, and instead begin to elevate and ascend their career to the next level.
An inflation-based raise could be considered a cost-of-living adjustment (COLA)—or a salary bump loosely tied to the percentage increase of the CPI—because the adjusted salary affords you the same overall purchasing power in life. And that’s certainly a relevant request to make at the moment, given the CPI’s notable rise.
An inflation-based raise could be considered a cost-of-living adjustment (COLA) because the adjusted salary affords you the same purchasing power in life.
But even amid the far less inflationary environment of the past decade (when COLAs wouldn’t need to be as big to keep up with inflation), these raises have largely dropped off in popularity, says career expert, job coach, and former Amazon recruiter Lindsay Mustain. In fact, most companies now set wages based exclusively on cost of labor (aka the market rate for a role, due to supply and demand) as opposed to cost of living. As proof, just take this March 2022 survey of more than 300 U.S. companies conducted by human-resources consultancy Mercer, in which 46 percent of those firms reported not factoring inflation into salary budgets for this year.
At the same time, however, salary increases and other monetary perks are generally on the rise, as companies scramble to retain top talent amid the pandemic-prompted “Great Resignation.” According to a workforce report conducted by management software company ADP, people who kept the same jobs in 2021 saw an average salary increase of 5.9 percent—an all-time high since the study began in 2014.
While that reality works in your favor, knowing exactly how to ask for a raise based on inflation still requires some preparation, much the same as asking for any kind of raise. “In fact, companies today often disguise what should be considered a COLA as a ‘merit raise’ or annual performance-based increase, offering anywhere from 0 percent for an average or underperforming employee to 3 percent for the absolute rockstar on the team,” says Mustain. In an ideal world, COLAs and merit raises would instead exist separately and in tandem—but because they’re often wrapped up into one thing, it’s helpful to use both the sky-high inflation rate and indicators of your performance to back your case for a raise right now.
Exactly how to ask for a raise based on inflation, according to career experts
It’s worth noting that all the usual raise-talk advice applies when you’re asking for a raise based on inflation—that is, don’t spring the meeting on your supervisor spur of the moment, and be empathetic and generally positive. But, there are a couple key factors to keep in mind when you’re thinking about how to ask for a raise based on inflation at the present moment. In fact, “present moment” is key here, as you’d be wise not to wait until your company’s regular performance review cycle to bring it up (more on that below). Here are four things to know about how to ask for a raise based on inflation, in particular.
1. Know your numbers in advance
This refers to a few key metrics, namely the current market rate for your role (based on the data you can find on Glassdoor, Indeed, and the like about what competitors are paying for roles like yours in your geographical area) as well as the rate of inflation at the time of your ask. This allows you to demonstrate the rise in your cost of living since your last salary increase.
After assessing both, also determine the percentage increase in salary that you’re seeking in advance, says Mustain, who recommends a minimum of 10 percent for standard performance—slightly above the nearly 8.5 percent inflation rate at the moment.
2. Be prepared to address both inflation and your performance
While, again, employers would ideally keep COLA considerations separate from merit-based raises—and conduct annual reviews of the entire payroll to ensure salaries are fair to market value—that’s just not often the case. So, to make your ask for an inflation-based raise more compelling, it would be smart to include details about your stellar performance in your role, too.
“Thoroughly document quantitative metrics and results from the period of time since your last pay increase, and come prepared with this documentation,” says Mustain. That way, you can deliver a one-two punch, saying to your manager something like, “In light of my job performance and the dramatic increase to the inflation rate, I’d like to discuss my salary with you to ensure that I’m being paid equitably compared to market conditions,” she adds.
3. Make the ask as soon as you’re ready
When it comes to asking for a raise based on inflation, there’s no time like the present, says Mustain. The inflation spike is happening right now, just as the still-ongoing “Great Resignation” is making it all the more essential for companies to retain their employees at all costs.
Requesting a meeting sooner than when your official performance review takes place can also open up a conversation about more frequent reviews—which can work in your favor, according to career expert Joe Mullings, chairman and CEO of The Mullings Group, a search firm for the health-tech industry. “You can make the case that the annual review process built on the business model of the past is no longer keeping pace with the rapid rate of change in today’s economic environment,” he says. In particular, asking for six-month reviews creates more opportunity for you to quantify the impact of rising inflation on your salary in real time.
4. If a raise is simply out of the question, ask for something else
It’s very possible that for reasons outside your control or your manager’s, their hands are tied in terms of raising your salary. “While a salary increase is the preferred way to go—as you get the compounding effect over the years—another possibility is to see if there’s a cash bonus opportunity that might supplement your take-home compensation,” says Mullings. Typically, one-off bonuses are easier for companies to offer on a quick timetable (just ask the folks at Google or Microsoft) in response to current events, as about 9.4 percent of companies did during the pandemic, according to a report from the U.S. Department of Labor.
And if a one-time bonus is also off the table? Remember that there are other perks that an employer can provide to help soften the inflation blow, while supporting you as a whole person. That might look like increased (or continued) flexibility for your work location or hours, reimbursement for education or career-development opportunities, more paid time off, or subsidized mental-health support.
In any case, it’s important to know before you ask that the tables have turned in your favor as an employee, says Mustain. Given the record-high number of open roles right now, your company likely needs you as much as you need your company—so, there’s no harm in asking for the kind of monetary boost that, in this inflationary economy, only seems fair.
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