The Best Way to Ask for an Increase in the Cost of Living
The end of the calendar year is a time for tactfully stepping out of holiday parties and risky speculations about what to get your colleague for Secret Santa, but more importantly, for many jobs, it’s also the time when performance checks are done , budgets and salaries are set. negotiations are underway.
The latest CPI inflation report showed that the annual inflation rate in the United States reached 6.2% in October, the highest level in more than 30 years. With prices rising all over the place, wage increases should be taken for granted – after all, not being able to raise wages based on inflation actually means the same effect as cutting your wages.
So if you are planning to ask for a raise, how should you factor the state of inflation into your conversation? Monica Torres writes for HuffPost that it’s not always worth referring directly to inflation during negotiations. Before citing record inflation as a defense, here’s what you need to know.
Why now is the time to ask for a raise?
Given that inflation is all around you, and with a limited labor market giving you an edge, why not increase your wages accordingly? It’s no secret that many employers are unlikely to raise your salary if you don’t ask. And with the new year fast approaching, now is the time to talk about wage increases.
Given these circumstances, we previously talked about raising the cost of living is an easier climb than, say, looking for a promotion (which is a more reliable way to significantly increase your income). But what is the cost of living increase and is it right for you?
What is the cost of living increase?
Cost of living increases, sometimes called cost of living adjustment (COLA), are increases in wages that correlate with increases in the cost of living from year to year. According to Indeed , some organizations may include annual pay adjustments in their compensation plan to accommodate annual increases in the cost of living.
Even if your employer does not officially offer COLA, raising the cost of living is a reasonable request. Here is Indeed’s guide to calculating your COLA . In the past, average growth was around 2-3% to match average inflation, but with consumer prices soaring higher and higher, asking for 5% to cover inflation makes sense . At the same time, rising inflation has the potential to weaken the case for your increase.
The case against fueling inflation
If you bring up the broader economic picture, you run the risk of scaring your employer away with your cost-of-living arguments. In fact, you run the risk of equipping them with a powerful counterbalance: they may respond to you with the fact that their costs of doing business have also increased with inflation. Nadia De Ala, Negotiation Coach for Technology Professionals, tells HuffPost that increasing your employers’ spending can give them enough room to undermine your inflation-driven demand.
De Ala says that you should still figure out how inflation affects your market value, and those numbers should still be part of your research before starting negotiations . However, knowing these numbers is not the same as making them central to your promotion request. Instead, she says, “The most important thing we want your employers to focus on is the value you bring with your work.” Your greatest weapon is your personal contribution, not the state of the economy.
Consider two different conversations
Daniel Space, a human resources consultant with strategic staffing business partners, told HuffPost that he recommends making a cost-of-living request in one conversation and a performance request in another.
Think of it as a two-way negotiation tactic. First, you view the increase in the cost of living as a simpler and more obvious request. For example, Space says you can ask your boss a simple question like, “Can [inflation] be considered part of the compensation process?” Then, even if that conversation fell short of expectations, you put inflation in a different cell than your merit-based query. This way, you can avoid the potential trap described above in which your employer can deflect your increased living costs by increasing their own operating costs.
Either way, be prepared to explain your value.
Asking for a raise boils down to establishing your value. However, whatever you suggest, your employer can turn you down for any number of reasons. Now is the right time to ask for a raise, but you must also be prepared to be disappointed. For more tips on how to ask for a raise, here’s how to tune in , and here’s how to prepare as much as possible .