Walking the Pay Raise Tightrope
By: James Flippin · May 08, 2023 · Reading Time: 3 minutes
As the cost of living continues to rise, employees are increasingly demanding their pay rise with it. Earlier this year, the labor market was historically tight, leading many experts to suggest it was a great time to do so. But now the timing might not be so ideal.
Companies are grappling with their own concerns over high interest rates and an economic downturn, leading them to prioritize efficiency and cost containment. This dynamic has left both parties feeling pressure, as employees struggle to make ends meet and companies scramble to limit expenses.
Currently, corporate cautiousness and employee needs are not exactly in harmony.
In recent months, compensation experts have observed a trend of companies, especially those in the tech sector, pulling back on merit and off-cycle raises. This shift indicates that organizations are becoming more cautious with their spending, which can have a significant impact on the size and scope of raises offered throughout the company.
At the same time, employees are showing an elevated desire to be properly valued at work. Pay disputes are becoming far more common, and underpayment is cited as a major reason for job dissatisfaction. In fact, a Morning Consult study found that 46% of workers contemplating leaving their jobs felt they were undercompensated.
Feeling the Squeeze
As businesses reassess financial situations and weigh the risks of offering raises, employees face more uncertainty when it comes to compensation. This doesn’t mean workers shouldn’t put their needs first and feel valued by employers. But it’s also important to recognize the fiscal reality forcing companies to scale back spending.
Experts suggest companies will still budget for raises, particularly for employees with unique or in-demand skill sets. So if you are feeling like your salary can no longer support your lifestyle in the current environment, it may be worth thinking less about how your employer values you, and more about the ways in which you bring value to your company. By walking the tightrope between their needs and yours, you just might get the raise you desire and deserve.
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