Ask HN: How to ask employer to match inflation rate, independent of pay rise
103 comments
It's simple you find another job. Companies get away with this kind of behavior because employees tend to be lazy and not move jobs. If companies realize that people will leave when they don't make sure salary automatically keeps pace with industry standards and inflation they will adjust their pay practices.
You don't say what industry you're working on but I think it's a fair assumption you're probably an IT of some sort. If so the job market is wide open right now, and it's pretty wide open for any industry. Go find another job that will have the increase that you want.
Not all employers behave this way but it does take a while to find a good one. My employer adjusted salaries late last year outside of merit increases and I received a 6% bump and pay for among other things inflation and just the general pay scale adjustment because the industry has started to pay more due to things like inflation.
You don't say what industry you're working on but I think it's a fair assumption you're probably an IT of some sort. If so the job market is wide open right now, and it's pretty wide open for any industry. Go find another job that will have the increase that you want.
Not all employers behave this way but it does take a while to find a good one. My employer adjusted salaries late last year outside of merit increases and I received a 6% bump and pay for among other things inflation and just the general pay scale adjustment because the industry has started to pay more due to things like inflation.
> It's simple you find another job. Companies get away with this kind of behavior because employees tend to be lazy and not move jobs.
It's not that employees tend to be lazy. There are real costs to switching jobs. Depending on the industry, you may have to devote many hours studying for the interview and spend time interviewing. Switching jobs is also risky because you may not like the job as much and you'll have to rebuild all the good will.
> If companies realize that people will leave when they don't make sure salary automatically keeps pace with industry standards and inflation they will adjust their pay practices.
You're assuming inflation means wage inflation. Just because goods went up 7% doesn't mean salaries necessarily went up by that amount. An employer prices to the market for talent, not to how much people need to maintain purchasing parity relative to last year.
It's not that employees tend to be lazy. There are real costs to switching jobs. Depending on the industry, you may have to devote many hours studying for the interview and spend time interviewing. Switching jobs is also risky because you may not like the job as much and you'll have to rebuild all the good will.
> If companies realize that people will leave when they don't make sure salary automatically keeps pace with industry standards and inflation they will adjust their pay practices.
You're assuming inflation means wage inflation. Just because goods went up 7% doesn't mean salaries necessarily went up by that amount. An employer prices to the market for talent, not to how much people need to maintain purchasing parity relative to last year.
Inflation does mean wage inflation because inflation across the board means all things become inflated. That's what the generic measure of inflation is. Now if you take a specific product one may inflate in another may deflate in relation to one another. When you take the overall inflation metric of your number of 7% that is overall the price of houses may have risen faster and the price of onions may have stayed the same or gone down but the average is 7%. Therefore your wage is also a part of that average and so you should average a 7% in relation to everything else.
Because that 7% means your employer is also selling their product at an average of 7% higher because they're consumables are an average of 7% more. Of which one of the consumables that a company purchases is employees.
When you talk about the risk of changing jobs if you're working for a company that does not automatically adjust your wage for inflation then I submit your working at a job that you should not like.
The only real exception to this is the case of hyperinflation where your economy is going into a death spiral. And that's a very real thing that happens in some countries but it doesn't appear to be what's happening now at least in the United States. When your economy suffers hyperinflation you have much bigger problems because you're getting ready for a complete economic collapse.
Because that 7% means your employer is also selling their product at an average of 7% higher because they're consumables are an average of 7% more. Of which one of the consumables that a company purchases is employees.
When you talk about the risk of changing jobs if you're working for a company that does not automatically adjust your wage for inflation then I submit your working at a job that you should not like.
The only real exception to this is the case of hyperinflation where your economy is going into a death spiral. And that's a very real thing that happens in some countries but it doesn't appear to be what's happening now at least in the United States. When your economy suffers hyperinflation you have much bigger problems because you're getting ready for a complete economic collapse.
I think what GP may have meant is that wage inflation has different factors than overall inflation.
Wages aren’t based on cost directly, but supply and demand. So it’s possible that inflation is up 10% because food, rent, etc but there’s still tons of people willing to do a job so wages did not match inflation.
So it’s important to look at how wages are doing rather than just straight lining from inflation.
I think based on the current economy and super low unemployment that wages have increased as well. Perhaps more than inflation.
Wages aren’t based on cost directly, but supply and demand. So it’s possible that inflation is up 10% because food, rent, etc but there’s still tons of people willing to do a job so wages did not match inflation.
So it’s important to look at how wages are doing rather than just straight lining from inflation.
I think based on the current economy and super low unemployment that wages have increased as well. Perhaps more than inflation.
it you think the price to switch is high for the employee you should see the price to switch for the employer
And the cost of possibly needing to move!
Unfortunately there are real costs of changing a job. Even a 20% is sometimes not worth the struggle of interviewing and getting used to the new company culture.
I agree that finding another job is the only likely option. I would not call that simple though.
I got a effective pay cut of 4.5% last year.
I got a effective pay cut of 4.5% last year.
Just ask straight up. If they don't listen, and it's that important to you, then leave.
I got a raise at the end of last year, as I do ever year. When they told me what the raise was I immediately responded by saying "That's less than the rate of inflation, this is essentially a pay cut."
And when there was an opportunity to ask questions of the executives I asked "My raise, and I assume the raises of many of my co-workers, were less than the rate of inflation this year. Will you consider cost of living adjustments to our compensation?" The answer was usual business speak about paying competitive market-rate salaries and whatnot.
I got a raise at the end of last year, as I do ever year. When they told me what the raise was I immediately responded by saying "That's less than the rate of inflation, this is essentially a pay cut."
And when there was an opportunity to ask questions of the executives I asked "My raise, and I assume the raises of many of my co-workers, were less than the rate of inflation this year. Will you consider cost of living adjustments to our compensation?" The answer was usual business speak about paying competitive market-rate salaries and whatnot.
Now imagine every employee in your city, regardless of industry, got a 7% inflation raise. This would then push prices up even more. Pushing inflation up even more. Pushing even more inflation raises next year.
Rinse. Repeat. It's a never ending loop of wage inflation
The only way inflation stops, or even deflation starts, is if someone "gives up" on inflation adjustments
Rinse. Repeat. It's a never ending loop of wage inflation
The only way inflation stops, or even deflation starts, is if someone "gives up" on inflation adjustments
This is only true if a 7% increase in wages causes at least a 7% increase in inflation, which it doesn't. The effect you're describing doesn't shoot up forever, but approaches a limit.
It's not just wages. Everything that costs money goes up "because inflation". Thus more inflation next month. This is exactly what we're going through with every month the new YoY becoming higher and higher
Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ...
Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ...
> Higher YoY inflation announced -> Companies raise prices on everything -> employees demand an inflation raise -> Higher YoY inflation announced -> ...
Yes. This is exactly the cycle that approaches a limit (all else being equal). Inflation-adjusting wages doesn't make inflation keep going up indefinitely.
Yes. This is exactly the cycle that approaches a limit (all else being equal). Inflation-adjusting wages doesn't make inflation keep going up indefinitely.
Companies are welcome to stop increasing prices, but I'm not going to fall on my sword re salary negotiation to make a tiny contribution to stopping inflation.
I don't care about every employer lol. My interest is my raise. If I can continue outpacing inflation, then I continue winning. How do you think rich people stay rich?
This is not correct.
The underlying causes of inflation are the monetary levers that the government controls. These are money printing and taxes.
The underlying causes of inflation are the monetary levers that the government controls. These are money printing and taxes.
Another option is that the Fed stops printing trillions of new dollars out of thin air.
Immigration was restricted for the expressed purpose of raising wages. It was a huge campaign promise but people didn't notice the inflation until Jan 20, 2021.
This math doesn’t check out
Good luck with that.
Chances are your salary and potential raise was budgeted long before the inflation hit, so a non-merit raise of 5% is not in this year's budget. Unless you have a particularly benevolent organization with funds enough to raise salaries 5% across-the-board it is unlikely that you'll get it. Or, they'll give people cost of living increases, that will pull funds out of the merit raise pool, so no merit raises will be offered, or will be considerably less. They may justify it by saying that inflation hit them too, and everything the company needs to buy to operate got similarly more expensive, so there is no extra money to splash for 5% cost of living increases across the board, and that "we all need to take the hit in the best interest of the company."
And, more cynically, they're getting you 5% cheaper now, so there is not a ton of incentive for them to pay you more, since you'll probably stay, or are easy enough to replace at the same or lower salary.
Chances are your salary and potential raise was budgeted long before the inflation hit, so a non-merit raise of 5% is not in this year's budget. Unless you have a particularly benevolent organization with funds enough to raise salaries 5% across-the-board it is unlikely that you'll get it. Or, they'll give people cost of living increases, that will pull funds out of the merit raise pool, so no merit raises will be offered, or will be considerably less. They may justify it by saying that inflation hit them too, and everything the company needs to buy to operate got similarly more expensive, so there is no extra money to splash for 5% cost of living increases across the board, and that "we all need to take the hit in the best interest of the company."
And, more cynically, they're getting you 5% cheaper now, so there is not a ton of incentive for them to pay you more, since you'll probably stay, or are easy enough to replace at the same or lower salary.
Managers often have little discretion for unusual pay increases. The budget process, "fairness", and company culture inhibit raises. For anything out of the ordinary, you either need to get a promotion, be indispensable (or have a really strong negotiating position), or leave.
In the short term, there may be other factors you can use to offset that. Informal time off, working conditions, work-paid travel to conferences, etc. They don't increase your salary (which means they're not taxable!), but they can increase your quality of life. Managers often have more ability to affect these things, or get budget to implement them, than they have in raising salaries. In my company, vacation and sick pay are ordained across the board. Even the C level is limited to (admittedly generous) standard levels. That's offset by giving managers broad discretion to grant informal time away - if the work is getting done, take a Friday.
PS - We're being shafted harder than most people know. The Consumer Price Index, the official measure of inflation, was selected to downplay the actual rate of inflation. The official CPI inflation rate is 8% at the moment. If CPI were calculated the same was as in 1980, it would be 15% (http://www.shadowstats.com/alternate_data/inflation-charts). "Additionally, over the past 30 years, the government has changed the way it calculates inflation more than 20 times. These ‘methodological improvements’ to the CPI are said to give a more accurate measure of consumer prices. However, these changes could also be a convenient way to include or exclude certain products that give favorably low results, but there’s no way to know, given the lack of transparency." (https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...).
In the short term, there may be other factors you can use to offset that. Informal time off, working conditions, work-paid travel to conferences, etc. They don't increase your salary (which means they're not taxable!), but they can increase your quality of life. Managers often have more ability to affect these things, or get budget to implement them, than they have in raising salaries. In my company, vacation and sick pay are ordained across the board. Even the C level is limited to (admittedly generous) standard levels. That's offset by giving managers broad discretion to grant informal time away - if the work is getting done, take a Friday.
PS - We're being shafted harder than most people know. The Consumer Price Index, the official measure of inflation, was selected to downplay the actual rate of inflation. The official CPI inflation rate is 8% at the moment. If CPI were calculated the same was as in 1980, it would be 15% (http://www.shadowstats.com/alternate_data/inflation-charts). "Additionally, over the past 30 years, the government has changed the way it calculates inflation more than 20 times. These ‘methodological improvements’ to the CPI are said to give a more accurate measure of consumer prices. However, these changes could also be a convenient way to include or exclude certain products that give favorably low results, but there’s no way to know, given the lack of transparency." (https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...).
As a manager at my company, this year we were given the usual: a small baseline increase with the ability to fudge individual numbers in a zero sum way as well as a small slush fund.
The one difference this year was we were also given official talking points on how to gently say "no" to anyone who brought up inflation when they rightfully complained.
The one difference this year was we were also given official talking points on how to gently say "no" to anyone who brought up inflation when they rightfully complained.
slimy
To my understanding, CPI does not weight amounts purchased, only general prices. I'm happy to be corrected if that's mistaken. Without the amounts, it's a linear combination of "we're being shafted" and "we can substitute those things left out of the CPI with some ease relative to other types of good." Income + substitution effects and such.
Your personal inflation is probably not 15% if you're not buying the exact same bundle of goods you purchased last year. Higher, yes, but if you substitute away or choose other options you're probably not expending exactly 15% more than last year.
Your personal inflation is probably not 15% if you're not buying the exact same bundle of goods you purchased last year. Higher, yes, but if you substitute away or choose other options you're probably not expending exactly 15% more than last year.
Shadowstats is not a reliable source of inflation information. I would link to a critique, but to be honest I think this point is more forcefully made by considering the volume of search results on the subject. Please stop repeating misinformation.
This is realistic, OP. Hop jobs every few years!
If you are optimising for income, changing employers can certainly work.
It is amazing how money is so tight for raises, while seeming flush with cash while hiring.
It is amazing how money is so tight for raises, while seeming flush with cash while hiring.
The money is tight for raises because people do not change jobs. The more people hop jobs, the higher the raises since the employer can no longer bet on most people staying put at lower pay.
In my experience, you will not get anything productive out of such discussions. When your salary drifts too far, go audit your salary with an external offer. Ask for a match or leave. Spare your current employer the drama.
Don't ask for a match - just leave. You're a marked man if you threaten to leave and then stay. I've seen that happen many, many times over the years.
If you want to work with your current employer then you could simply ask your manager whether they've heard anything about adjusting salaries for inflation. You can keep it informal and light, but their response will tell you everything you need to know about whether they're planning on adjusting salaries.
If you want to work with your current employer then you could simply ask your manager whether they've heard anything about adjusting salaries for inflation. You can keep it informal and light, but their response will tell you everything you need to know about whether they're planning on adjusting salaries.
I'm so tired of hearing this.
If your boss is a competent business person, you would be insane not to ask for counter offer. This way I got a 50% bump last year. No hard feelings, and nothing has changed.
I received an offer, and my employer has beat it. If they only matched I would probably still leave.
Your suggestion is a weird behavior. Just be direct. We are in tech and don't need to beat around the bush. I can quit my job tomorrow and start a new job next week.
If your boss is a competent business person, you would be insane not to ask for counter offer. This way I got a 50% bump last year. No hard feelings, and nothing has changed.
I received an offer, and my employer has beat it. If they only matched I would probably still leave.
Your suggestion is a weird behavior. Just be direct. We are in tech and don't need to beat around the bush. I can quit my job tomorrow and start a new job next week.
Needlessly fearful and one-sided take.
It's exactly as true that if you ask and they reject, then THEY are a marked man. You are on the lookout and will probably leave as soon as it's convenient. If they don't care about that then all the more reason to move on.
It's exactly as true that if you ask and they reject, then THEY are a marked man. You are on the lookout and will probably leave as soon as it's convenient. If they don't care about that then all the more reason to move on.
Does asking for a match imply that you are threatening to leave, though? It does seem like it, but I could definitely see it being framed as "here's the market for me, you should pay me more because I don't want to leave".
With a competent manager there should be no hard feelings when framed as a market adjustment. Competent managers know that employees become higher paid with time. It's up to them to decide whether or not to try and stick with an employee to delay hitting their "this is a big enough difference I should jump ship" amount or not.
It's no different than a business telling a customer "listen, you're gonna have to pay more because I have other more valuable work I could be doing". The customer can pay more or they can go elsewhere.
It's no different than a business telling a customer "listen, you're gonna have to pay more because I have other more valuable work I could be doing". The customer can pay more or they can go elsewhere.
> With a competent manager there should be no hard feelings when framed as a market adjustment.
It's not "hard feelings", it's "Chris is more likely to leave than Pat."
It's not "hard feelings", it's "Chris is more likely to leave than Pat."
In order to have an offer to match you had to go out and look for a job, interview, and get an offer. You're now going to be perceived as a flight risk. All you have to do is say 'yes' and you're gone. That's a threat, whether you intended it to be or not.
>Does asking for a match imply that you are threatening to leave, though?
It absolutely means you're leaving
If they match today, you've already telegraphed to them that you're not happy, and will leave as soon as you can
You're going to be first on the chopping block for layoffs, last in line for promotional consideration, etc
You're basically telling your employer "pay me more even though I'm not doing anything else for you"
It absolutely means you're leaving
If they match today, you've already telegraphed to them that you're not happy, and will leave as soon as you can
You're going to be first on the chopping block for layoffs, last in line for promotional consideration, etc
You're basically telling your employer "pay me more even though I'm not doing anything else for you"
No one has any loyalty and its a terrible, soul less, and bitter state of affairs.
Managers and companies gain more with honey than salt. We need more goodwill, we are not just cogs.
I do understand financials here enough. When 4 out of 12 have left our team in the last few months, they did so after counter offers came up still 10s of thousands short. Replacing them will be next to impossible.
Managers and companies gain more with honey than salt. We need more goodwill, we are not just cogs.
I do understand financials here enough. When 4 out of 12 have left our team in the last few months, they did so after counter offers came up still 10s of thousands short. Replacing them will be next to impossible.
Agreed. And I think it's useful to look at your compensation longer term rather than comparing it with inflation every single year. There are going to be big moments (promotions, switching companies, etc) where you get a large jump in compensation that far outpaces inflation. And there will likely be years where your employer didn't budget large enough raises all around to match inflation. It's fine if that bothers you enough to look elsewhere, but it's also worth zooming out and looking at the graph of your compensation compared to inflation - which will look like a bunch of steps compared to a relatively smooth line. There are certain teams I've been part of during my career that I've enjoyed working with far more than average. If, one of those years, I got a measly raise, I still would have stayed in place and enjoyed my work and not minded taking a smaller step. Then, eventually, when another catalyst for job change appeared (the project was ending, bad management moved in, etc), I would look for something that gives me a nice big compensation step to take (don't do this for too many years in a row though).
Disclaimer: Armchair economist.
Having salaries automatically track inflation can actually lead to more inflation. When Australia had double digits inflation in the 1970's, one of the first things done to fix the problem was making sure salaries stop tracking inflation.
Having salaries automatically track inflation can actually lead to more inflation. When Australia had double digits inflation in the 1970's, one of the first things done to fix the problem was making sure salaries stop tracking inflation.
Corollary: lets all take a pay-cut to keep inflation in check!
Yeah because the immense cost of hiring back 10 million worker that business owners laid off can't fall on business owners.
Can you blame them for thinking the workers would be desperate to come back for wages that were already too low to cover exploding housing and healthcare costs?
And don't you dare tell me the businesses are the ones raising the prices, they are not. The prices that other businesses publish are what causes prices to go up and business owners are powerless.
Can you blame them for thinking the workers would be desperate to come back for wages that were already too low to cover exploding housing and healthcare costs?
And don't you dare tell me the businesses are the ones raising the prices, they are not. The prices that other businesses publish are what causes prices to go up and business owners are powerless.
You know what stops inflation at its root?
Governments stopping to print or lend money they don't have.
The monetary fiat model is broken. Inflation is basically a tax the government can levy and increase as they wish, without democratic due process.
Worse part of it? The poorer you are, the more heavily taxed you get through inflation.
Governments stopping to print or lend money they don't have.
The monetary fiat model is broken. Inflation is basically a tax the government can levy and increase as they wish, without democratic due process.
Worse part of it? The poorer you are, the more heavily taxed you get through inflation.
This is very wrong. Supply shocks also create inflation and governments can do little about that. The alternatives to fiat money such as gold standard currencies convert growth into deflation which is economically and socially devastating.
> This is very wrong
You mean governments stop printing and borrowing money indiscriminately does not stop inflation?
> Supply shocks also create inflation
I did not say indiscriminate money printing by governments is the only source of inflation.
You mean governments stop printing and borrowing money indiscriminately does not stop inflation?
> Supply shocks also create inflation
I did not say indiscriminate money printing by governments is the only source of inflation.
You answered your own question - if money printing is not the only source of inflation, then inflation will continue even if printing stops.
Most money is created by private banks, and velosity of money affect inflation more than money supply does
Most money is created by private banks, and velosity of money affect inflation more than money supply does
The working poor are generally the biggest beneficiaries of inflation. Their salaries go up, and they don't have any assets that lose value due to inflation.
Non-working poor like pensioners do often get hit hard by inflation.
Non-working poor like pensioners do often get hit hard by inflation.
> assets that lose value due to inflation.
most ppl in usa have their net worth tied to homes which have outpaced inflation.
Working poor will never ever be able to afford these again dooming them to permanent poverty for generations. So yea they are aren't really benefiting from inflation even if their salaries kept pace with inflation( which hasn't been the case).
most ppl in usa have their net worth tied to homes which have outpaced inflation.
Working poor will never ever be able to afford these again dooming them to permanent poverty for generations. So yea they are aren't really benefiting from inflation even if their salaries kept pace with inflation( which hasn't been the case).
What assets are losing value because of inflation? I thought cash is the only thing losing due to inflation, and debt is one that wins.
I swear the things you read about macroeconomics is all just contradicting each other.
I swear the things you read about macroeconomics is all just contradicting each other.
The stock market has a fairly direct reverse correlation with interest rates. So when interest rates go up, the stock market goes down.
The p/e ratio is a measure of earnings per dollar of capital. If you invert it to the e/p ratio you can directly compare to interest rates. So a 5% interest rate is comparable to a p/e ratio of 20. So when the interest rates goes up, the "natural" p/e ratio for stocks goes down, thus deflating the stock market.
The p/e ratio is a measure of earnings per dollar of capital. If you invert it to the e/p ratio you can directly compare to interest rates. So a 5% interest rate is comparable to a p/e ratio of 20. So when the interest rates goes up, the "natural" p/e ratio for stocks goes down, thus deflating the stock market.
Isn't that because using leverage to buy stocks becomes more expensive?
I think the OP was talking about real assets like houses, land, cars, etc. Those don't go down in value
I think the OP was talking about real assets like houses, land, cars, etc. Those don't go down in value
No, this is a flawed thinking in many levels.
Salaries take months, if not a full year to follow inflation. A salary is always behind the curve and devalued.
Besides, employees frequently fail to secure inflation adjustment to their salaries, especially in blue collar trades, where an individual worker is easier to replace.
Even when salaries are adjusted, it follows an average rate determined (more appropriate to say manipulated) by the same government which created the inflation.
Most likely the rate of inflation for your family's consumption basket is significantly higher than this "official" index.
Salaries take months, if not a full year to follow inflation. A salary is always behind the curve and devalued.
Besides, employees frequently fail to secure inflation adjustment to their salaries, especially in blue collar trades, where an individual worker is easier to replace.
Even when salaries are adjusted, it follows an average rate determined (more appropriate to say manipulated) by the same government which created the inflation.
Most likely the rate of inflation for your family's consumption basket is significantly higher than this "official" index.
Just like comments to the original poster, low wage people get pay bumps by bouncing jobs. And in this tight job market, that's happening.
The biggest benefit the working poor are receiving is the low unemployment rate. The working poor are much better off with a low unemployment rate and high inflation than they are with high unemployment and low inflation since it is usually the working poor that fill the unemployment ranks.
What? I thought inflation helped the middle class the most, since inflation inflates away their large amounts of debt (houses)...
> You know what stops inflation at its root?
People thinking that there won’t be inflation. Absent supply shocks businesses often raise prices to get out ahead of their competitors or to more gradually raise prices so consumers won’t notice compared to a sudden increase. After a supply shock it can take for prices to stabilize because people expect inflation.
>Worse part of it? The poorer you are, the more heavily taxed you get through inflation.
Only if you're one of the "good poors" that does smart things like living within your means and not taking on debt.
Only if you're one of the "good poors" that does smart things like living within your means and not taking on debt.
Yes this is the real problem.
If salaries tracked inflation in an environment without money printing, I'd expect you wouldn't observe an increase in inflation.
If salaries tracked inflation in an environment without money printing, I'd expect you wouldn't observe an increase in inflation.
My goal as a someone who works isn't to reduce inflation. It's to maximize my salary. This fact has zero weighting in my actions.
Frankly, you don't these days.
You job-hop after 1.5-3y and end up getting a nice 15% or higher boost to your salary.
As a converse, when they replace you, they'll have to pay higher market rates. Thats because businesses do the same to employees as customers: the longer you stay the more they'll charge you (or the less they'll pay you). They do that because you're "captive". They count on you on being 'sticky' and not have the wherewithall to actually change.
You job-hop after 1.5-3y and end up getting a nice 15% or higher boost to your salary.
As a converse, when they replace you, they'll have to pay higher market rates. Thats because businesses do the same to employees as customers: the longer you stay the more they'll charge you (or the less they'll pay you). They do that because you're "captive". They count on you on being 'sticky' and not have the wherewithall to actually change.
If deflation occurs would you ask for a pay reduction as well? Probably not.
But, at the same time you have to do what's best for you and your family. Easiest thing is just to have a straight up conversation with your manager and see if you can get a timeline for a response and specific actions that will be taken in pursuit of this. Be prepared for "no", and be prepared to have to find a new job. In the vast majority of conversations I have with people on this topic, they have to find a new job to get a higher salary, unfortunately.
But, at the same time you have to do what's best for you and your family. Easiest thing is just to have a straight up conversation with your manager and see if you can get a timeline for a response and specific actions that will be taken in pursuit of this. Be prepared for "no", and be prepared to have to find a new job. In the vast majority of conversations I have with people on this topic, they have to find a new job to get a higher salary, unfortunately.
Does deflation occur? If yes, I am not too old to see it I guess. And one can argue that the company should be the one asking for pay reduction in that case.
Also I agree about "find a new job to get a higher salary" thing. Then I witnessed the company struggling to find a good replacement etc. Are these people really dumb, or is it something else going on that I can't see.
Also I agree about "find a new job to get a higher salary" thing. Then I witnessed the company struggling to find a good replacement etc. Are these people really dumb, or is it something else going on that I can't see.
> Are these people really dumb
I'd say it's less "dumb" and more that the incentives are aligned in such a way that they just won't do it. But we know that it works well. Netflix I think is/was known for finding out new market rates and just giving everyone a raise to reflect that rate so they don't leave. Also I think people in positions where they're making the call on rates don't have data or other information to really assess what we see as so obvious, which is that losing an engineer over a 5% pay increase during a period of inflation is far more costly than just giving them the pay increase. But I see this kind of thing all the time. There are a lot of what I call "boomerang companies" especially Fortune 500 where if you want a meaningful raise at the company you have to leave and then get hired back. Problem is many leave and don't come back, so the company churns talented people and keeps all the people who can't get higher rates on the market. It's really silly.
I'd say it's less "dumb" and more that the incentives are aligned in such a way that they just won't do it. But we know that it works well. Netflix I think is/was known for finding out new market rates and just giving everyone a raise to reflect that rate so they don't leave. Also I think people in positions where they're making the call on rates don't have data or other information to really assess what we see as so obvious, which is that losing an engineer over a 5% pay increase during a period of inflation is far more costly than just giving them the pay increase. But I see this kind of thing all the time. There are a lot of what I call "boomerang companies" especially Fortune 500 where if you want a meaningful raise at the company you have to leave and then get hired back. Problem is many leave and don't come back, so the company churns talented people and keeps all the people who can't get higher rates on the market. It's really silly.
I guess you don’t remember the dot com bust and all the salary cuts that happened with some companies instead of layoffs.
No I don't. In 2000/2001 I was 12 years old and in grade school.
At that point the employer could ask for a reduction... The situation is symmetric.
As a strong performer you'll generally do much better if you negotiate based on market rates.
How much more would you get paid by another employer? How much more would your current employer have to pay to backfill your role?
If you want to signal loyalty, phrase it as "I really like what I'm doing here but it's distracting to know that I may be giving up a XX%-YY% pay difference"
If your employer can actually fill your position without paying 20+% more or losing several months of ramp up, maybe you are being paid well regardless of the year over year CPI.
How much more would you get paid by another employer? How much more would your current employer have to pay to backfill your role?
If you want to signal loyalty, phrase it as "I really like what I'm doing here but it's distracting to know that I may be giving up a XX%-YY% pay difference"
If your employer can actually fill your position without paying 20+% more or losing several months of ramp up, maybe you are being paid well regardless of the year over year CPI.
Can ask for anything. Stuff costs more is a you problem, not a them problem, until you actually quit though.
Every year you stay, expect your compensation to drop further below the wider market. Then when you move it gets reset to some point vaguely correlated with the market.
It's also way easier to move than to fill out a "promotion packet" or whatever corporate nonsense is in the way of internal ladder climbing.
This obviously sucks. Management know it, engineering knows it. Maybe it'll stop being the case at some point.
Every year you stay, expect your compensation to drop further below the wider market. Then when you move it gets reset to some point vaguely correlated with the market.
It's also way easier to move than to fill out a "promotion packet" or whatever corporate nonsense is in the way of internal ladder climbing.
This obviously sucks. Management know it, engineering knows it. Maybe it'll stop being the case at some point.
This is a question of curiosity/naivete:
Why hasn't the human civilization found a model that counters inflation altogether? Is it because we can't plan for the demand new adult consumers bring? The birth rate? We keep printing money? Someone somewhere (probably in commodities/real estate) will ALWAYS affect greed and see how far they profit at the expense of others?
Like, who keeps pushing the rising prices? Can't we just say "stop doing that", make it illegal, and just print more money when a new person enters the world?
I have some suspicion that all of this wealth transfer to the elite doesn't help jack since they just let it sit in their accounts, earn dividends, and not really circulate inside the economy.
Why hasn't the human civilization found a model that counters inflation altogether? Is it because we can't plan for the demand new adult consumers bring? The birth rate? We keep printing money? Someone somewhere (probably in commodities/real estate) will ALWAYS affect greed and see how far they profit at the expense of others?
Like, who keeps pushing the rising prices? Can't we just say "stop doing that", make it illegal, and just print more money when a new person enters the world?
I have some suspicion that all of this wealth transfer to the elite doesn't help jack since they just let it sit in their accounts, earn dividends, and not really circulate inside the economy.
Inflation keeps the velocity of money high, which increases the general economic welfare (compared to having a low velocity of money)
And you can ban people from raising prices. It's called price controls, and it creates awful shortages.
And you can ban people from raising prices. It's called price controls, and it creates awful shortages.
> I have some suspicion that all of this wealth transfer to the elite doesn't help jack since they just let it sit in their accounts, earn dividends, and not really circulate inside the economy
I have some suspicion you don't understand how "the elite" end up getting (and staying) wealthy
They rarely have much in the way of liquidity - almost all of their wealth is on paper in the form of investments in opportunities (stocks, bonds, businesses, real estate, etc)
By investing in those things, they encourage/enable others to do things that bring them wealth, and bring the investors added wealth, too
I have some suspicion you don't understand how "the elite" end up getting (and staying) wealthy
They rarely have much in the way of liquidity - almost all of their wealth is on paper in the form of investments in opportunities (stocks, bonds, businesses, real estate, etc)
By investing in those things, they encourage/enable others to do things that bring them wealth, and bring the investors added wealth, too
Lots of things can cause inflation, but the main reason we have inflation is because we deliberately cause it by (effectively) printing money. Some economists have decided that a target of 1-2% per year is ideal to keep people spending and investing rather than stuffing their money in the proverbial mattress and hoarding it. Deflation is meant to be avoided at all costs. This has been decided to be the ideal balance to keep the economy as strong as possible. Personally, I am sceptical that there is much difference between 1% inflation and 1% deflation, but I am not an economist.
I'm no economist, but my understanding is that inflation was pretty minimal for hundreds of years prior to the late 1800s. Inflation appears, though, to be reasonably beneficial and (this is totally not economics language) motivates the circulation of money, in moderation – enough so that they have a target for it.
There seem to be numerous economic theories and inflation plays a different role in most of them, that I can tell, both good and bad.
There seem to be numerous economic theories and inflation plays a different role in most of them, that I can tell, both good and bad.
Inflation incentivizes spending, money sitting in a bank account doesn't make the charts go up.
First, it's a bad idea in general to tie your salary to outside economic conditions. If there's a recession, are you going to volunteer to take a pay cut? You should focus on the value you add and your increased productivity to justify a raise.
Second, it's bad to tie your raise to inflation because inflation is very real but very distributed. Here's the CPI for the USA: https://www.bls.gov/cpi/ Note that the change in March was far larger in energy than in food. Are you going to try to map your usage of goods to determine your personal rate of inflation and ask for that size of raise? I hope that sounds silly to you; it sure does to me.
If you want to ask for a raise, point to your productivity and dedication to the company, as well as what competitive comp looks like. Surveys are great for that.
Most employers want to be at market rate or above for employees they want to keep. Bringing in inflation just confuses the issue and makes it look like you want something for nothing.
Second, it's bad to tie your raise to inflation because inflation is very real but very distributed. Here's the CPI for the USA: https://www.bls.gov/cpi/ Note that the change in March was far larger in energy than in food. Are you going to try to map your usage of goods to determine your personal rate of inflation and ask for that size of raise? I hope that sounds silly to you; it sure does to me.
If you want to ask for a raise, point to your productivity and dedication to the company, as well as what competitive comp looks like. Surveys are great for that.
Most employers want to be at market rate or above for employees they want to keep. Bringing in inflation just confuses the issue and makes it look like you want something for nothing.
Although engineers have been bring this subject up lately, its a complete non-issue. The only group its truly a problem for, are those paid minimum wage. And minimum wage should definitely be adjusting
If you're making more than minimum wage, then the only thing setting your compensation is the job market. Not inflation, not how much a house costs in your city, and not the fact you just had 3 kids in 3 years
If you can find a job that will pay you much more, you probably already could have when inflation was 0%. So again, this has nothing to do with inflation. Are you looking to maximize your income? Interview interview interview, if you get better offers, bring them back to your company or just leave. If you don't get better offers, why would your company adjust your income by 5%? A 5% pay cut is great news for them and for you, if thats what the job market is saying is your fair pay
If you're making more than minimum wage, then the only thing setting your compensation is the job market. Not inflation, not how much a house costs in your city, and not the fact you just had 3 kids in 3 years
If you can find a job that will pay you much more, you probably already could have when inflation was 0%. So again, this has nothing to do with inflation. Are you looking to maximize your income? Interview interview interview, if you get better offers, bring them back to your company or just leave. If you don't get better offers, why would your company adjust your income by 5%? A 5% pay cut is great news for them and for you, if thats what the job market is saying is your fair pay
> Although engineers have been bring this subject up lately, its a complete non-issue. The only group its truly a problem for, are those paid minimum wage.
It affects everyone the same, just the absolute impact is greater the less you earn. (And nothing special about minimum wage in that, why does 50p an hour over it suddenly save you?)
> If you're making more than minimum wage, then the only thing setting your compensation is the job market. Not inflation
I see what you're saying, but market compensation is a function of (among other things) inflation.
It's much more efficient for employers to give inflation-linked raises (resp. paycuts in deflation!) than it is for employees to constantly job hop, or to take a buffer of real-terms paycuts and hop every x years (or after every $x or x% cut).
It affects everyone the same, just the absolute impact is greater the less you earn. (And nothing special about minimum wage in that, why does 50p an hour over it suddenly save you?)
> If you're making more than minimum wage, then the only thing setting your compensation is the job market. Not inflation
I see what you're saying, but market compensation is a function of (among other things) inflation.
It's much more efficient for employers to give inflation-linked raises (resp. paycuts in deflation!) than it is for employees to constantly job hop, or to take a buffer of real-terms paycuts and hop every x years (or after every $x or x% cut).
Market rates are a function of availability. If you flooded the market with more great engineers than employers hiring, the compensation would go towards $0. Which in the real world is just set at minimum wage
If you're in a minimum wage job, then your employer (successfully?) believes there is basically an endless stream of people who can replace you at no higher cost than what the government deems the absolute minimum
Once you're in a job higher than that, the only function is what other people with your skills agree to get paid. If OP is making top of the market, their employer has absolutely no reason to give them even a $1 raise. If top of the market compensation went down, then it would make sense for anyone making top of the market to get their salary cut
If you're in a minimum wage job, then your employer (successfully?) believes there is basically an endless stream of people who can replace you at no higher cost than what the government deems the absolute minimum
Once you're in a job higher than that, the only function is what other people with your skills agree to get paid. If OP is making top of the market, their employer has absolutely no reason to give them even a $1 raise. If top of the market compensation went down, then it would make sense for anyone making top of the market to get their salary cut
As a people manager, we are well aware of inflation and real income. At least at my company we don't have complete control over annual salary changes, though. This year we were given a mean increase of X% that we had to hit for the team, and I can say that X was less than half of 5.
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"Hi boss, I hope you had a good weekend. There is something that has been bothering me. I can see that inflation has started to increase quite significantly, and I wanted to know what the company policy was wrt salaries. Can we schedule a chat to talk about it? Thanks much".
I also want to point out that inflation at 5% doesn't mean your income needs to go up 5%. Let's take $100k, say you pay 25% tax. That's $75k left. Let's say you have a mortgage, car payment and those are fixed. $35k. Let's say you save $10k. That leaves you with $30k. For your case, you only need a raise to have $1500 extra. So a new salary of $102k or 2% raise. I'm not trying to make case for employers, just want to point out that you might not be losing money at rate of 5% yearly by earning less. The real loss actually comes from your savings in the bank earning 0%.
So will you rather 2% raise and earn 5% on your savings or get 5% raise and earn 0% on your savings?
So will you rather 2% raise and earn 5% on your savings or get 5% raise and earn 0% on your savings?
lol. where do you get 5% for your savings?
but then if your rent goes up with 4 percent everything changes, so -.-
you don't. You just leave.
Gone are the days wher you stay for 10+ years...Its move every 2-3 yers for career progression and salary increase. Of course if you're happy where you are then fine.
Gone are the days wher you stay for 10+ years...Its move every 2-3 yers for career progression and salary increase. Of course if you're happy where you are then fine.
>inflation for the year is 5%
RANT: No, that's a Scalar. Inflation is a vector. To accurately state inflation, you have to sample the prices of everything in a basket of goods, define the items in the basket, and never allow arbitrary substitution. I know of no such extant measure. Even then, the scalar produced is only accurate for that particular set of goods, and nothing else.
Thus actual inflation is unknowable, and all statements with a single number are propaganda. /RANT
RANT: No, that's a Scalar. Inflation is a vector. To accurately state inflation, you have to sample the prices of everything in a basket of goods, define the items in the basket, and never allow arbitrary substitution. I know of no such extant measure. Even then, the scalar produced is only accurate for that particular set of goods, and nothing else.
Thus actual inflation is unknowable, and all statements with a single number are propaganda. /RANT
There is only one way to do so with a 100% success rate - get another offer and show it to your boss. Even if he says no, you still get the raise :D
On the other hand if the raise you are asking for is above current market rate (which could easily trail behind inflation), you don't really have much options.
On the other hand if the raise you are asking for is above current market rate (which could easily trail behind inflation), you don't really have much options.
Ask for a more stock option heavy pay package with less base pay. Stocks generally perform better than cash in inflationary environments, but of course they carry risk as well because of their volatility.
> Stocks generally perform better than cash in inflationary environments
I would challenge you to prove this statement with data. The S&P got crushed in both the 40s and the 70s. I mean setting the bar at returning better than -4% is absurdly low and major spans in both of those periods would have failed.
Especially when you weigh the opportunity cost of other better inflation hedge trades you could make if you were compensated in cash, I don't think this is particularly wise advice.
Especially in a recession that probably comes with a growth to value rotation, tech stocks are about the last place you want to be. (not counting FAANGetc here)
https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
I would challenge you to prove this statement with data. The S&P got crushed in both the 40s and the 70s. I mean setting the bar at returning better than -4% is absurdly low and major spans in both of those periods would have failed.
Especially when you weigh the opportunity cost of other better inflation hedge trades you could make if you were compensated in cash, I don't think this is particularly wise advice.
Especially in a recession that probably comes with a growth to value rotation, tech stocks are about the last place you want to be. (not counting FAANGetc here)
https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
"In god we trust, all others pay cash."
Equity is nice when things are on the up, but things like Netflix's recent problems will never happen to straight cash.
It is certainly a balance.
Equity is nice when things are on the up, but things like Netflix's recent problems will never happen to straight cash.
It is certainly a balance.
4x down is crazy, in 2008 when I was working at Google we had an option to reset the stock options (and their vesting period) when the stock price when down.
It’s also quite interesting that they totally lost touch with the user base.
Progressive liberal American values are very strange even for liberal people in many places where I go (outside US). It will be interesting to see if Reid can adapt, but I think he’s smart enough to change direction.
It’s also quite interesting that they totally lost touch with the user base.
Progressive liberal American values are very strange even for liberal people in many places where I go (outside US). It will be interesting to see if Reid can adapt, but I think he’s smart enough to change direction.
Yeah just say "with inflation this raise is actually a pay cut" and if they don't do anything and that bothers you... start looking
To my knowledge, universities and government agencies automatically raise salary across board to match inflation, but usually not as high as 5%.
"I need a 5% raise because inflation is 5%" and then stare at them and don't say anything until you hear what you want to hear.
If they give you 3% or something, say "so I'm getting a 2% pay cut" and tell your boss every couple days you're not happy with taking a pay cut. They'll figure it out
If they give you 3% or something, say "so I'm getting a 2% pay cut" and tell your boss every couple days you're not happy with taking a pay cut. They'll figure it out
Was your inflation 5%? If you drive and eat meat at average levels then it might be, but if you drive more than average or eat mostly meat then it might be more than that. It seems like you are overreacting to economic metrics and at $100k/year should be able to manage these fluxuations yourself.
Make the point it’s cheaper to match inflation than to source a replacement
Just put on a mail first.
Hi, [their name].
I love working for [company name], and I'm excited about the future of our team. As you know, we're a small group of passionate people who take pride in our work, and I'm grateful to be part of this family.
As you also know, inflation rates are rising, and it's becoming more difficult for me to keep up with my basic needs. I've been here for three years now, and I believe that my skills have grown considerably since joining the company. With this in mind, I'd like to ask that you consider matching the inflation rate moving forward, starting from next year.
I'm aware that you already gave us a raise this year. However, as you mentioned at the time, that raise was based on performance reviews and not pre-emptive of future rates. I understand that it's difficult for companies to predict economic trends—but as a small business, I think we can both agree that flexibility is one of our greatest strengths! Don't hesitate to let me know if there's anything else I can help with in terms of making the case for an increase.
Hi, [their name].
I love working for [company name], and I'm excited about the future of our team. As you know, we're a small group of passionate people who take pride in our work, and I'm grateful to be part of this family.
As you also know, inflation rates are rising, and it's becoming more difficult for me to keep up with my basic needs. I've been here for three years now, and I believe that my skills have grown considerably since joining the company. With this in mind, I'd like to ask that you consider matching the inflation rate moving forward, starting from next year.
I'm aware that you already gave us a raise this year. However, as you mentioned at the time, that raise was based on performance reviews and not pre-emptive of future rates. I understand that it's difficult for companies to predict economic trends—but as a small business, I think we can both agree that flexibility is one of our greatest strengths! Don't hesitate to let me know if there's anything else I can help with in terms of making the case for an increase.
>As you also know, inflation rates are rising, and it's becoming more difficult for me to keep up with my basic needs.
If you are earning a wage well above median I'd be careful with this, if someone I am working with would imply the have a difficulty meeting their basics needs on a very good wage I'd likely be thinking less of them.
If you are earning a wage well above median I'd be careful with this, if someone I am working with would imply the have a difficulty meeting their basics needs on a very good wage I'd likely be thinking less of them.
Job hopping is needlessly stressful. High turnover in software occupations leads is a root cause of low code quality. It cements the dysfunctional management practices you see decried on HN every day.
Organize a union in your workplace and prepare to take escalating collective actions to protect your standard of living and working conditions.
https://www.code-cwa.org/
My coworkers and I have done it and would be happy to advise anyone in a similar position.
Organize a union in your workplace and prepare to take escalating collective actions to protect your standard of living and working conditions.
https://www.code-cwa.org/
My coworkers and I have done it and would be happy to advise anyone in a similar position.
You have taken a pay cut only if you haven’t figured out a way of saving part of your income and putting that into assets that beat inflation. If you spend the entire income and don’t save (and not even paying a mortgage to acquire an asset), then yes, you have taken a pay cut. That may be poor decision making (depending on the situation), especially if you’re earning $100,000 (which puts you in a tiny percentage at the top of the world in terms of income).
Inflation directly affects what you spend money on. You can choose to spend on other things that don’t suffer as much from inflation, but that may not be easy. On the other hand, how much you save from your income and where you put that is a lot more (relatively speaking) in your control.
Employers will match salaries based on supply, demand and other factors affecting the business. Inflation could affect the supply and demand equation, but is not a direct factor for them to consider. Companies exist to maximize profits. That also means paying the minimum possible to a person and extracting the maximum value from that person. Changes will happen when this equation is under threat.
Inflation directly affects what you spend money on. You can choose to spend on other things that don’t suffer as much from inflation, but that may not be easy. On the other hand, how much you save from your income and where you put that is a lot more (relatively speaking) in your control.
Employers will match salaries based on supply, demand and other factors affecting the business. Inflation could affect the supply and demand equation, but is not a direct factor for them to consider. Companies exist to maximize profits. That also means paying the minimum possible to a person and extracting the maximum value from that person. Changes will happen when this equation is under threat.
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Independent of raises based on things like role changes or good performance how can I stress that I really dislike the idea of not having my salary keep up with inflation, and then how can I best go about ensuring that my employer keeps the salary up to date with inflation?