You had better keep working on that budget, because your pay raise might not be much this year.
MarketWatch reports that, on average, employers only expect to give out raises of 2.9% in 2013. That is higher than the last three years, but not by much. In 2010 they expected to give raises of 2.3%. In 2011 and 2012, they estimated an average raise of 2.7%.
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With unemployment still fairly high, firms aren’t having to compete for workers, which means they can keep pay raises low. In a better economy, they would have to compete for the few remaining workers, luring them in through higher base pay.
What Does This Mean for Me?
When you’re thinking about how a raise will affect you, you have to keep in mind inflation, since it decreases the buying power of your salary. Your goal is to at least keep pace with the rising cost of living, and ideally beat it. You do that by getting a raise that is higher than inflation.
In 2010, if you got a raise of 2.3%, you would have gotten ahead by just a little, because inflation was at 1.5%. But with inflation at 3% in 2011, if you got the average raise of 2.7%, you would have fallen behind.
Before the recession, average base pay raises were at 5%. But how much raise you might get depends on other factors besides the economy, like what industry you’re in, and, of course, your performance.
Get ahead of inflation–way ahead–by reading all our resources on negotiating for a raise and increasing your income right here.