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Ask HN: How to ask employer to match inflation rate, independent of pay rise

• temp8964 4y ago
  To my knowledge, universities and government agencies automatically raise salary across board to match inflation, but usually not as high as 5%.
• UmYeahNo 4y ago
  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.
  • temp234 4y ago
    This is realistic, OP. Hop jobs every few years!
    • gorjusborg 4y ago
      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.
      • lotsofpulp 4y ago
        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.
  • criticas 4y ago
    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 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-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/?sh=49ee7755200b https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...).
    • tomrod 4y ago
      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.
• elmerfud 4y ago
  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.
  • bko 4y ago
    > 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.
    • elmerfud 4y ago
      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.
• nicolaslem 4y ago
  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.
  • ClumsyPilot 4y ago
    Corollary: lets all take a pay-cut to keep inflation in check!
    • fundad 4y ago
      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.
  • rmbyrro 4y ago
    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.
    • bryanlarsen 4y ago
      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.
      • legolas2412 4y ago
• pacifika 4y ago
  Make the point it’s cheaper to match inflation than to source a replacement
• gregshap 4y ago
  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.
• JonChesterfield 4y ago
  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.
  • kadomony 4y ago
    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.
    • mhmmmmmm 4y ago
      Inflation incentivizes spending, money sitting in a bank account doesn't make the charts go up.
    • missedthecue 4y ago
      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.
    • petercooper 4y ago
      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.
• saos 4y ago
  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.
• Apreche 4y ago
  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.
  • shmatt 4y ago
    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
    • brimble 4y ago
      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.
      • shmatt 4y ago
        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 -> ...
        • brimble 4y ago
          > 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.
• micromacrofoot 4y ago
  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
• morelandjs 4y ago
  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.
  • lastofthemojito 4y ago
    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).
  • taylodl 4y ago
    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.
    • sodality2 4y ago
      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".
• shmatt 4y ago
  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
  • OJFord 4y ago
    > 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).
    • shmatt 4y ago
      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
• ericmay 4y ago
  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.
  • bubersson 4y ago
    At that point the employer could ask for a reduction... The situation is symmetric.
  • seqizz 4y ago
    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.
    • ericmay 4y ago
      > 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.
• noasaservice 4y ago
  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.
• xiphias2 4y ago
  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.
  • anarticle 4y ago
    "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.
    • xiphias2 4y ago
      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.
  • anm89 4y ago
    > 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-data https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
• Parker_Powell 4y ago
  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.
  • waffleiron 4y ago
    >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.
• Wurdan 4y ago
  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.
  • deleted 4y ago
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• d--b 4y ago
  "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".
• AnonC 4y ago
  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.
  • deleted 4y ago
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• segmondy 4y ago
  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?
  • mirceal 4y ago
    lol. where do you get 5% for your savings?
  • interactivecode 4y ago
    but then if your rent goes up with 4 percent everything changes, so -.-
• starwind 4y ago
  "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
• luciusdomitius 4y ago
  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.
• bwestergard 4y ago
  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/ https://www.code-cwa.org/ My coworkers and I have done it and would be happy to advise anyone in a similar position.
• m0llusk 4y ago
  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.
• mooreds 4y ago
  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/ 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.
• mikewarot 4y ago
  >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