How to Negotiate Salaries and Raise in a Time of Soaring Inflation

From grocery shopping to dining out, Americans’ wallets took another hit as inflation rose for the seventeenth consecutive month in April. The silver lining? These undeniable data can be an advantage in the next salary negotiations.

As consumer prices soar — with energy costs up 30.3% and food prices up nearly 10% in the past year, according to the Bureau of Labor and Statistics — employers also feel the heat. According to the BLS quarterly Employment cost indexwages and salaries increased by 5% for the 12-month period ending in March 2022, and the cost of employee benefits increased by 4.1% for the same period.

But adjusted for inflation, private sector wages and salaries decreases 3.3% year over year, while benefits fell 4% over the same period, points out Bruce Bergman, regional economist for the BLS’s New York-New Jersey Information Office. This makes it difficult for workers and potential employees to effectively negotiate salaries and raises.

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“It’s important to do research to determine what the fair market value of your skills and experience is,” says Toni Frana, career services manager at FlexJobs, a search platform dedicated to flexible and remote work opportunities. .

Bergman suggests that employees arm themselves with the latest cost-of-living data to create more up-to-date salary proposals that show employers how their earnings compare to their costs, using BLS statistics on actual earnings. Released monthly, this data allows employees to view average hourly earnings for their industry and occupation, relative to the Consumer Price Index.

He also points to ICE as another valuable trading resource. “The ECI is an objective measure of the evolution of industry standards [when it comes] how much employers spend on wages and benefits,” he says. “Everyone wants to make decisions based on facts, and those are clear facts that someone can refer to in a discussion about compensation.”

Although the ECI numbers are averages, the index is still a good tool to help employers and employees gauge pay rates in their industry, occupational group and region, Bergman says. These benchmarks can change from year to year if, for example, an employee starts entirely remotely in one region and moves to another region to work in person at a later date.

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But as valuable as it is to come to a discussion about compensation armed with data, for employees who will continue to hold a position with an employer, the interactions and conversations that take place throughout the year are just as essential to the success of the negotiation, says Frana.

Regular check-ins allow employees to position themselves for higher raises by making the necessary changes to better align with expectations, she says. “This is not helpful [for an employee] to be informed for the first time of the points to be improved during an annual review. Employers should [maintain] a dialogue throughout the year, whatever the pace and means of conversation deemed appropriate.

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