Raises?

[frugalone]

I have a question about "typical" raises (if there is such an animal).

It looks like my new workplace does not give "merit raises." At my last job, I did get one--once. Every year after that, the company gave cost-of-living allowance raises (usually they were about 4%, or just about enough to keep up with the rising cost of health insurance).

We all recently received an email at work saying they were giving everyone an across-the-board raise of 3%. For me, this comes to less than $1K a year. I'm a bit...underwhelmed. Not that I am ungrateful for my job, but when I think about how I am making more than 30% less than I was at my last position, it's pretty hard for me to jump up and down over 3%.

So I'm wondering: Is this unusual? Typical? A propaganda-ish morale-booster?

And I'm also curious: Is it unusual to get a merit raise in this day and age?

Thanks!

[goldensmom]

I worked for a state agency for 28 years and the most we ever got was 2% and some years nothing. The percentage increase was negotiated by contract. I would have been satistied with a COLA increase (more than 2%) but that never happened.

[SteveinMN]

Yes. :~)

Compensation is perhaps the biggest game most organizations "play" with their employees, at least those employees not on Mahogany Row (another game, but one in which the organization actually has a chance to lose).

Where I was working last (a corporate support area), you were reviewed on a roughly-annual basis depending on your "performance" rating and any recent promotions. After a promotion (which usually came with a 10% bump in pay), one could go up to 18 months without a review (and, therefore, without a raise).

About six years ago, annual support-group funding was changed from a fixed (but negotiated) amount of money to a percentage of company sales. There was no way that was ever going to result in a bigger overall budget than we'd had, but it certainly could (and did) result in a smaller budget -- which then became that year's reason for offering skimpy raises.

Then The Great Recession hit, and no one complained about (not) getting raises (not even COLAs).

Once business improved, though, the compensation formula was changed again. This time, anyone with a salary at or above grade midpoint with a performance rating of 3 or lower (out of 5) went without any kind of raise. They did claim to adjust midpoints based on market conditions. But that's hardly a move forward in IT. A 3 rating meant you did everything that was asked of you well (including the numerous changes in direction and the additional work engendered by people leaving the company). It was strongly rumored for years that many managers short-circuited the messy business of rating those reporting to them by giving everyone 3s. 4s were rationed. And the last person who earned a 5 was seen a long time ago crossing a lake on foot. So you could have a good year, but depending on what you were paid and the ol' bell curve, you could be thanked with no raise at all. Reminds me of the old Dilbert cartoon in which employees are finally classified as the company's ninth most important asset (http://search.dilbert.com/search?w=carbon+paper&x=0&y=0) (behind carbon paper).

So the 3% across the board sounds like an attempt to catch people up some from the last few years of turmoil. And, in comparison to the COLAs which were given in previous years, 3% sounds pretty good. But it's not a merit raise in any way. And, in lieu of any huge threat to organizational funding, it's a cheap way to skimp on employee compensation.

My humble opinion, of course (though the new comp policy was one reason I stuffed my old job; I was lucky enough to not have to work like a dog for that kind of treatment).

[frugalone]

Interesting POV, Stevie.
For a long time, I worked in a support role in the legal field. They never gave raises, IIRC. There was a yearly, and sometimes a twice-yearly bonus, however.
I am paid pretty well for what I do, but it's really difficult to do without that 30% of my income that is now missing. Esp. since the benefits here cost more to pay into than at my last job. I didn't know how good I had it.
20/20 hindsight, as my mom would say.

[iris lilies]

3% is a fine raise in today's world. There have been years where I received nothing.

Also, the Cost of Living assumption: what measure are you using? The one I used from the Feds (link below) shows that purchasing power of the dollar has been going down at about a rate of 1 cent per year. As an example, if you (the generic you) make $35,000 annually, your purchasing power went down $350 this year over last year. A 3% raise covers that and more.

http://www.census.gov/compendia/statab/cats/prices/consumer_price_indexes_cost_of_living_index.html

I used "The Purchasing Power of the Dollar" chart

[redfox]

In the non-profit sector for 30+ years, and I have never had a raise. The way I make more $$ is leaving for a new position, so I have left a lot of jobs. It's pathetic.

[frugalone]

I don't know what measure they used at my last place of employment. We used to get a letter saying basically, "Here's your COLA raise for this year." I never checked it against any federal web sites or anything. The funniest thing was, they'd increase the price of the health care insurance just enough that our raises would cover the new increase.


3% is a fine raise in today's world. There have been years where I received nothing.

Also, the Cost of Living assumption: what measure are you using? The one I used from the Feds (link below) shows that purchasing power of the dollar has been going down at about a rate of 1 cent per year. As an example, if you (the generic you) make $35,000 annually, your purchasing power went down $350 this year over last year. A 3% raise covers that and more.

http://www.census.gov/compendia/statab/cats/prices/consumer_price_indexes_cost_of_living_index.html

I used "The Purchasing Power of the Dollar" chart

[iris lilies]

I don't know what measure they used at my last place of employment. We used to get a letter saying basically, "Here's your COLA raise for this year." I never checked it against any federal web sites or anything. The funniest thing was, they'd increase the price of the health care insurance just enough that our raises would cover the new increase.

My point is that it's likely that few actually consult any COLA index, the COLA increase is a figure picked out of the sky. And it's not enough for the receivers because it's never enough. And it's barely do-able by the company because that's part of doing business, give enough to keep the good employees. The stellar ones will probably have to leave to get what they deserve.

[Tammy]

I've been in healthcare for 16 years. 5 companies, and about 7 positions. I got tiny raises here and there. The ones higher thsn 2-4 percent were because I promoted myself by taking a job with another company. I know people in healthcare who have taken a 25% pay cut in order to keep their job.

[dmc]

I always got a raise, and usually some kind of bonus to boot. I always worked for a privately owned company though. I always figured as long as I was making them money they would want to keep me around.

I did quit my first job out of college after only working for 6 months. I was promised a raise and was told that since the next job was in Arkansas, getting the same pay was like a raise. It only took me a few day's to find another job paying more.

[Tradd]

1-3% seems to be standard for salaried employees right now.

I got a 2-3% raise in 2008 or so. 2009, there were one week furloughs. 2012, I got a merit raise of 5%, which amounted to $2K a year. I'm told only one other person in my department got this.

Several months ago, I got a $10K/year raise for getting my customs broker license. Granted, this is pretty much a once in a lifetime type of raise, without going to a new job or getting a big promotion that gets you a significant income jump.

[iris lilies]

1-3% seems to be standard for salaried employees right now.

I got a 2-3% raise in 2008 or so. 2009, there were one week furloughs. 2012, I got a merit raise of 5%, which amounted to $2K a year. I'm told only one other person in my department got this.

Several months ago, I got a $10K/year raise for getting my customs broker license. Granted, this is pretty much a once in a lifetime type of raise, without going to a new job or getting a big promotion that gets you a significant income jump.

Once I got a giant raise, it was (if I remember correctly) 12%. It was a result of one of those EEOC studies in a goobermnt agency and being female I was determined to be disadvantaged in pay. eye roll.

I told my boss thanks, that is nice but really, you offered me $X to take this job and I was happy to take $X and that was our deal. Now I feel as though I'm a gamer. ugh, hate that ch*t. Oh and then some people in my department (surprisingly, females!) "lost" in the game. No raise for them! Nanny G in her infinate wisdom...

[dmc]

You also need to be careful of not going over the Obamacare cliff. That little raise may end up costing you in subsidies. Going from $61500 to $62,100 could cost you thousands in free government cheese. This is for a family of 2.

If your on the edge you may want to ask for a reduction in pay.

Thankfully many of us can control our income somewhat.













You don't want to miss out on the free government cheese.

[frugalone]

Oh no...I just realized something I WILL be over the cliff because of the raise. But (get this, and go ahead and laugh): I get a financial subsidy from my employer b/c I don't use their health insurance. I am not really making ends meet, and I need that subsidy in order to pay my health insurance!

Now I'm starting to wonder if I need to consult an accountant. To see if the subsidy/tax break is going to be better than the raise etc. And you know what's really funny? I STILL won't be making ends meet, raise or not. And I don't know if it's optional to take the raise or not. I work for an institution with more than 1000 employees. I can't imagine they're going to let me "refuse" it.

So the bottom line is: If I accept the raise, I lose the gov't. subsidy. If I take my employer's health insurance, I'm down $100 a month. The raise will probably be more like $50 a month after taxes. I don't even know if my employer will still give out subsidies for not using their insurance.

It also occurred to me that there may be changes in my employer's health care benefits due to Obamacare. But so far no one has said anything.




You also need to be careful of not going over the Obamacare cliff. That little raise may end up costing you in subsidies. Going from $61500 to $62,100 could cost you thousands in free government cheese. This is for a family of 2.

If your on the edge you may want to ask for a reduction in pay.

Thankfully many of us can control our income somewhat.













You don't want to miss out on the free government cheese.

[ApatheticNoMore]

3% across the board raises again seems like winning the life lottery, it's been a long time since I've got a raise and merit raises in the rare cases that anyone gives them anymore are seldom more than that. However if it means you can't afford healthcare it's no kind of win at all. I 100% agree that the real way to get more money is to get a new job. Is the health care cutoff for gross income? Net income is fairly easy to lower if need be if one has access to a 401k, traditional IRA, etc..

[frugalone]

It's gross income, I believe. But I just emailed our HR department to see what my actual salary is, and if that employer's subsidy is indeed considered "income."

At this point, I'd love to get a new job. That's a whole other story though. Can't take the stress of the field I was formerly in, and I make pretty good money for what I do.

[bae]

Every company I have been involved with that gave COLA increases based the number on the US Dept. of Labor's regional statistics, there wasn't any mystery about the process.

One thing I've always wondered though - do COL increases drive inflation? That is, if we give everyone a 3% raise, does that extra wage income simply push up the region's inflation over the next reporting periods? The wage-payers are forced to find that 3% *somewhere*, and I suspect one of the places is in increased prices of goods sold...

[frugalone]

I heard from HR and apparently I make less than I thought I did. :0! They don't count the health-insurance-opt-out-subsidy toward my income at all. The couldn't give me a figure for what I'd be making after the raise because it's not really "official" yet. We did get an email saying everyone would get a raise but the board/cabinet apparently hasn't put its final gold seal of approval on it.

It will be interesting to see how this all unfolds!

[Gardenarian]

We used to get regular COLA raises. They stopped about five years ago; the union negotiated one small raise since then.

Where I work there is also a regular "step" program, based on how long you have been employed. As long as you are doing satisfactory work, you automatically move up to the next step until you plateau at step 10.

[frugalone]

We don't have a union. Maybe the faculty does, but regular employees here don't. Nor do we have any sort of step program. I believe our state universities have those (as well as state employees and fed employees).



We used to get regular COLA raises. They stopped about five years ago; the union negotiated one small raise since then.

Where I work there is also a regular "step" program, based on how long you have been employed. As long as you are doing satisfactory work, you automatically move up to the next step until you plateau at step 10.

[lmerullo]

Raises - what exactly are they? My small business owner boss has not given one in so long, I don't remember what they are.... I know our pay structure was changed in 2004, and has been static since as far as benefits (haven't received an increase in vacation time since then, sigh!) He did a merit pay thing, but since our industry is going downhill we never see any bonus money... at the time, the bonus was supposed to equal the 20% pay cut we all took (2008 or 2009), and then growth would increase pay. Yeah, right!

[AmeliaJane]

I have some friends in academia, and raises (not big ones) are tied to moving forward in the tenure process. I work in non-profits, and managers very rarely have the opportunity to give merit raises that make any kind of a difference. It's pretty much tiny COL increments, if anything. The only person I know who has gotten a substantial raise was someone working for a small, privately owned company. I would love to not get reviewed for 18 months, though. Around here it is a lot of paperwork with not a lot of actual effect on compensation.