Don’t expect a bigger raise this year

Ummm, I work for a fortune 10 company in. I have been with the company for just one year in sales and received a 10.2% raise my first year.

Agreement w/ key employee was 5% raise every 2 years. So it is raise time & he has asked for 13% raise! UGH! Anybody out there work 1500 hours/year for $55,000.00?

These posts clearly demonstrate one thing: People who spend time browsing web articles and posting messages earn smaller raises than average. Hmmmm . . . coincidence? Methinks not.

Well, if you get a 2-3 percent raise in 2008 that’s better than what the company I work for is getting. We were told, no one is getting a raise in 2008, but I bet the top dogs got their bonuses

Most people I know have gotten the minimal 2%-3% raise a year for many years now. You add that on top of health insurance premiums that as an employee have almost doubled in that same time, my paltry raise is no longer a raise, but a cut in pay.

Our parents used to get double digit raises and a pension, that is now a thing of the past. I remember them, but now only the CEO’s and upper management get the big raises. The CEO’s make such a disproportinate amount of money compared to the average worker anymore. If they took 2-3% less raise it would give all the worker bees a decent raise for once.

Chris in Bethesda honestly has the right idea. In most industries, the days of getting paid what you deserve and ensuring your own job security by doing quality work are over. Your employer can and will take any excuse to fire you at any time. You should behave accordingly. An erg spent fulfilling anything beyond exactly what’s asked of you is an erg completely wasted.

The only way to save yourself really is entrepreneurship. If that’s not feasible, get a financial planner and start saving as much as you can ($50 a month is better than nothing) so that you can retire and get out of the race entirely someday.

Assume for the moment that “real” inflation, which includes food and energy costs, has been closer to 5% per year rather than 2.5% or so that’s been the BLS number for the past several years, and further assume that this year (and likely next year) inflation will be closer to 10% by the same measure, and the reality that emerges is that even a 3.9% raise per year does not begin to reach cost of living adjustments necessary to keep up with inflation … and in general, even that figure likely includes sizable bonuses on the part of a small percent of the population and little to no even nominal increase for the overwhelming majority of workers.

This is the dividend society at work – most of those bonuses were in general paid not through normal compensation channels but through dividends. The top 10% effectively were paid directly through dividends, with the top 0.1% earning a whopping 25% of all income compensation through these dividends.

In good times, these top dividend earners were largely invisible – low interest rates meant that you could buy the house that you couldn’t otherwise afford, the expectation that both spouses in a marriage would work often contributed to the illusion that overall the family was doing reasonably well, and you could always re-mortgage your house (in essence, selling part of it back to the bank) in order to boost your bank balance.

Now, credit liquidity is drying up everywhere as the true scale of the incompetence, misappropriation and outright fraud begins to come to light, people are hunkering down and taking increasingly hostile and unattractive jobs for fear of being out of work, and people are becoming scared, depressed and angry.

I lived through the tech recession in the early 2000s as an out of work programmer and technical writer with several books to my credit. Eventually the industry recovered (somewhat) and the last few years have been quite positive for me and those in the tech field especially.

However, these are also people who are highly skilled, usually with advanced degrees and training, and who are used to jumping from job to job because the tech industry is inherently unstable. For the first time in a generation, there are going to be a large number of people who are either going to be facing the horrors of stagflation while trying to find jobs in markets that will likely not return for a decade or more (if ever), while there will be a second wave of baby boomers who are nearing retirement but who are only now beginning to realize that their nest-egg is made up largely of 4th and 5th tranch CDO paper worth absolutely nothing.

My prediction is that within a few years, if the growing inequity is not staunched and rebalanced, conspicuous consumption may very well make you a target by out-of-work mobs. Push the middle class far enough, and, as history has proven time and time again, they will rebel.

All I can say is outsoucing outsourcing and outsourcing to other countries seems to be the answer for all companies these days. I havent had a riase in 5 years. Last year it went to Brazil, this year Argentina.
When will they stop this……

I thought Annie’s article was terrific and pretty much spot on. I work to further the 50 plus jobseeker (through Gen Plus and my blog at http://genplus.blogspot.com)., so challenges as outlined in the article and in all the comments are magnified for this demographic. BJ in Cleveland hits part of the nail on the head — “Only a very small percentage of companies believe in good retention policies.” That is very true. When a company is honestly concerned about holding onto their workforce, the compensation (and raises) will reflect that retention effort. Retention is not front and center yet as an American issue (although it will become more and more of an issue over the next 5 years) for most big companies. Highest raises tend to come from smaller companies who need and value their employees on a more personal level. As well, it is generally understood among professionals (less so with hourly workers) that in order to get a significant jump in pay, you need to jump jobs — that can translate in a 10 – 25% salary increase. If you ask for a raise (or salary adjustment to reflect your job duties) and don’t get an answer you like, then your best chance of getting a salary raise will lie in finding a new job. Unfortunately, I’m also seeing MANY 50 plussers unable to find jobs, get raises, and often having salaries cut or their positions eliminated in the current market.

I voted with my feet. Current employer not appreciating my contribution w/3.5% raise. Decided to move to another company and negotiated a whopping 45% raise. Don’t whine – GO FIND IT!

P.S. I hate to say it but I predict we’ll see a dramatic increase in suicide rates in the near future. I’m trying not to be among them.

BT from Charlotte: it’s not anything personal against you or people like you, but your comment perfectly illustrates the problem. You and other managers get double digit raises because you cut company’s expenditures (namely give smaller raises to your employees) while people in non-managerial positions get raises below inflation level.

That’s also why the average is misleadingly high at 3.9%. While most people will get raises below that, management and people on Wall Street will get enough to raise the average. Nothing against those folks… I guess this is how the world works.

After 29 years working for a Fortune 500 company, I was “downsized” in February 07. Prior to that, I had not received a raise for over 4 years. At 56 years of age, I consider myself lucky to have landed a new job in April 07 but the salary is two-thirds less than what I had been making.

I think Bob from Yorkville, IL said it best…the problem with the economy can all be traced to GREED.

signed…a new member of the MISSING CLASS.

William in Atlanta is spot-on.

I’m at a fortune-50 company, advanced degrees, 18+ years experience, professional certification, yadda-yadda. Last year was the first raise in 6 years, a whopping 2%. Comapny is making record profits & earnings. All the justification for current pay / raise system is based on “benchmarking.” That word “benchmark” used to mean….. see what the best practuce is, what the best (in class) companies are doing. But now it means, what is the average. So the company wants the public image to be “we are the best” but internally the message is “we are trying to be average.” Oh, in case my boss reads this, yes I am still very happy to have this job.

My company runs completely counter to this article. I myself just received a 30% increase on Jan 1, but all of the managers in our company received at least 10%. I’m also scheduled to get 2 additional 10% increases (in July and January ‘09). I am not entirely sure, but I think my raise stems from the fact that I kept my department under budget by six figures in FY ‘07. I had not worked here a full year when salary increases were decided last year and my raise was 5%. However, for those not in a position to save their companies this kind of money I can see where the market is tough – our hourly employees have not received a raise yet this year.

I guess we should be happy we have a job. Raises will never match inflation. Only a very small percentage of companies believe in good retention policies. The bottom line is that the middle class is being squeezed out. It is already apparent we are being split into two classes, either you have enough money to be comfortable, or you don’t. Granted there are varying degrees of ‘not enough’ but it is still a struggle. The middle class today consists of two over-worked parents whose combined income is barely enough to raise two kids and a mortgage. Savings and a vacation are merely a dream. And if you think it’s bad where your at, come to Cleveland where Grocery Stores and Fast Food chains aren’t even hiring. The bottom line is we have to adapt. The economy is more global than ever and America is not keeping up with foreign competition, look at the steel or auto industries. The days of 30 years with the same company are long gone. Be flexible, try to learn new things, and give yourself a raise by job hopping. We can’t expect current employers to take care of us. It truly is survival of the fittest. Oh, and something else that doesn’t hurt, from my experience the people at the top are great at lying, manipulating, and cheating. Good luck at your next phase in this crazy game.

MAT in SFO, I have asked for more. Every year and get the same answer, this is all you will get. As long as the “average” is say 3%, why would a company give you more than any other company? Companies now are happy with the status quo of 1-3%, there is no incentive to give more. Right now and for quite awhile really, it’s an employers market and we’re just along for the ride.

I agree with Doug’s comment from NY. Writing this article is just going to justify to the big bosses that a lower than normal raise or none-at-all is ok.

Annie here — First of all, the raises companies plan to give (their budgets were written up before this article, obviously) aren’t “lower than normal”: 3.9% is the same as last year, and actually a bit higher than the 3.4% average raise that was the norm for several years before that. And second, are you really suggesting that from now on, I should report only good news? What kind of journalism is that? Anyway, folks, never forget that these figures are *averages*. If you believe you are worth more, put together a solid argument for a bigger raise and ASK for more!

I work for a fortune 500 company# 109, the air is filled with Lay Off/job elimination/cost reduction. We will be lucky to have a job in 2008, none of us even dare to dream of a raise or hope how big it is going to be.

I am work for a large company and continue to get the paltry raises that the company “graces” me with every year, expecting me to be happy with it. Instead I do less and less work every year. Take as many days off as I can, lie about sicknesses and family deaths and basically squeeze as much time off as I possibly can get out of this company. Why? Because my mother always said, “You get what you pay for” and if they are’nt paying–then I am not giving. How is it that I am able to do this? I live in a huge metro area (Washington D.C.) and have extensive academic credentials so I continually threaten to leave the company which would mean that it would cost them a lot more to find someone else so they would never fire me no matter how rediculous I act. In the end I feel like a winner cause I am able to take so much time off.

CEO sent the memo last week. No merit increases for anyone this year. Ouch! Well, at least I am still employed…

Don’t want to argue with those who are making out….however you can get a feel for the numbers by simply seeing these posts. For those of you who are doing well, good for you, but it doesn’t mean the rest are un-eduacted, under-acheiving, or incompetent. The numbers speak for themselves!

Degreed ME myself thank you very much. Like I said…don’t worry, your time will come. Better be saving some of that money golden boy.

People go to work even if they are sick because why would you want to lose the little PTO time you get. 10-15 days PTO per year is pathetic. It is greedy and nothing but modern-day-slavery. It is bad for the economy since burned out and overworked people in the USA do not perform half as good as their counterparts in other civilized western countries.
Raises! It should be at least 10% to keep up with inflation. How much has gas alone gone up in the last year? There is no way inflation is less than 10%!

Why would you even write this article? It helps no one. So now, my boss will most likely read Fortune and think to himself “Gee, Fortune says my employees should not expect much of a raise this year, so I won’t give one.” Thanks a lot for your article, Annie. Gee, I wonder how many writers can do the same job. Maybe you shouldn’t expect a raise as well?

A 3% raise is less than inflation, so you are getting paid less than a year ago. Ugh! Maybe the difference is that during my 8 years I invested in a master’s degree (part-time, paid out of pocket), spent a week oversees for a certificate class, studied for and got a project management certification, and changed jobs 4 times for steps up. That’s how to get the raises. And be someone who helps companies outsource to avoid getting outsourced yourself.

You mean we won’t get another huge payraise this year?! Oh no…I was expecting the usuall 1 or 2%, I guess they’ll have to decrease our saleries.

Don’t worry Faifax Rob, outsourcing your job is just around the corner.

I don’t expect a big raise in 2008. I started 2007 off with a 13.2% salary adjustment. Then, a 6% raise when I received an annaul assessment. When I was given an offer by a competitor, my company came back with a 25% counter. I’m ok with a small raise in 2008. Hopefully it won’t be that way for too many years, though.

I’ve received one increase of 2.5% in the past 5 years! Want to know what’s wrong with the economy? GREED! There are a great many more people getting squeezed by the greedy than there are greddy people….and the much higher percentage of the purchasing population continues to see their net pay go down! The economy problems are real simple, the part of the population you count on to purchase goods and services simply don’t have any money!

Ho hum 3.9% raise? I don’t think I’ve ever received a raise over 3.5%. The standard seems to be 2.5-3%. Maybe I’m just a bad employee or in the wrong business…

A 3.9% raise would be a good year. At my company, we went 5 years with no raises, then for the past 2 years, we have 2-3% raises. Whomever wrote this article must be doing something “special” to feel that a 3.9% raise would be so paltry.

And by the way, as a tech consultant with business education, I have had raises of 7-15+% per year for my 8 year career and now make about 2.5 times what I did 8 years ago. This year, probably a small raise but a big bonus (about 30 percent of base, paid mostly in equity).

I dont know how the goverment justifies giving the general worker making minimum wage in Ca. a 50 cent increase when they are usually incompetent people just entering the workforce,while hardworking people in the job market for years are just trying to keep with the pace of inflation.Bottom dwellers are making too much for the new and incompetent.

Just where are your numbers coming from. I am a professional manager who has worked in manufacturing throughout my career. Most of my contemporaries have been lucky to see 2% increases in a good year and many years with of increases.
Just how many workers have “press mentions, journal articles, speeches, etc”??
I’m tired of articles like yours that seem to address a very, very small % of the workforce. Your not dealing with the real world that many of us live in on a daily basis.

Anne, goes to show you’re not in touch. Big raise? From whom? I’m lucky to get 3% and that doesn’t even cover inflation! I have a friend who hasn’t had a raise in 4 years! This is a big problem for middle american’s as raises are needed to keep up with costs of every day living and it’s just not happening. Yet companies expect their employees to work longer hours and keep to the grindstone and meet the ever escalating goals of the company. This is as lopsided of a situation as I’ve seen in corporate america.

It has been a market distortion for many decades that allowed Americans without unique skills (globally speaking) to get paid more than people with those skills in other countries. Things always reach equilibrium. But America’s advantage comes from entrepreneurism and marketing prowess. So I am glad to hear that small business owner can buy his Aston Martin. That inspires me to further my own entrepreneurial ventures so I don’t end up one of the people getting pay cuts or 3.9% raises.

Employers gave up adjusting employee compensation based on company performance and individual merit years ago. Now, they simply gather salary data and adjust their employees’ salaries to “the market.” Human capital is just another commodity to be had for the lowest amount of money. If that capital is to be had cheaper overseas, that’s where they go to get it. They then pat themslves on the back for fulfilling their “fiduciary responsibility to the stockholders” and give themselves a six- or seven-digit bonus. Now get back to work!

Raise!? Heck, I was given a 20%+ pay CUT Nov 2006 and hadn’t had a raise in 4 years before that!!! You might ask, we’ll why put up with it? Because this is MI and everyone is scared. Cept the owners of the small biz I work for. One just went to England to purchase an Austin Martin. (Where’s the rolling eyes smily when you need it)

I have news for you Annie, most Americans haven’t had a decent raise in 8 years or so. Real incomes for most Americans have stagnated with a bigger share of the pie going to the upper end of the income spectrum, and rising health care costs