Is this an opportune time to ask for a raise? Or, given the recent spate of tech layoffs, is it better to lay low for a while?
Wages are not playing catchup with inflation, and tech companies have announced more than 60,000 job cuts this year, with indications that there will be more to come. But here is one note of caution: Bring up your own performance during pay negotiations — and not external factors like inflation and interest rates.
The good news: Employers are giving their staff pay raises: The increase in wages over the past year climbed to 5.1%, from 4.9% in the prior month, the Labor Department said Friday. Salaries are still rising much faster than they were before the pandemic, when they rose about 2% to 3% a year.
U.S.-based employers announced 76,835 jobs cuts in November, a 127% jump from the previous month, according to a report by Challenger, Gray and Christmas released on Thursday. That’s 417% higher than a year ago. So far this year, companies announced plans to cut 320,173 jobs, a 6% increase from last year.
“Employers and employees alike are concerned about inflation, rising interest rates and the prospect of a recession in 2023.”
But hiring has outstripped layoffs. On Friday, the Labor Department reported 263,000 new jobs in November, while the unemployment rate held steady at 3.7%. However, the rapid gains in hiring have become a big source of concern at the Federal Reserve, which has been raising interest rates in an effort to cool inflation.
Employers and employees alike are also concerned about inflation, rising interest rates and the prospect of a recession in 2023. “Navigating the impacts of a recession is no easy task, but it’s important for employers to remember that businesses aren’t the only ones staying afloat,” said John Morgan, president at Lee Hecht Harrison, a talent mobility company, in New York.
“Workers are also facing unprecedented job uncertainty and a rising cost of living,” he added. Given this confluence of events and concerns among both companies and their employees about the uncertain economic road ahead, should you ask for a raise? Consider these factors before walking into your boss’s office:
Judging whether the timing is right
Don’t bet on the labor market remaining strong indefinitely. “The window to land a salary bump now may be closing,” said LinkedIn career expert Blair Heitmann. While the U.S. still has a tight labor market, the tech sector has shed thousands of jobs, and those layoffs are a portentous sign that other sectors may be next.
If you are close to promotion or you have an upcoming review, your manager will most likely discuss your compensation, she said. Companies review salaries during their quarterly reviews, so it might make more sense to bring up your own situation before the company sets its goals and budgets for the year ahead, she added.
What kind of financial shape is your company in? Pay close attention to the company’s quarter results, and listen to your managers when they speak about department performance, Heitmann said. At the same time, keep your ears peeled about whether your coworkers are getting raises or other benefits, she added.
Employees are expensive to replace
One thing to keep in mind if you genuinely feel like you are being underpaid: It’s expensive for employers to replace staff. When an employee asks for a raise, employers will likely consider the turnover costs associated with finding new talent, Morgan said.
Another factor in your favor, particularly at a high-performing company that has no plans for layoffs: Hiring remains difficult, which will likely last through the next year, according to the Workplace Trends Report by Indeed and Glassdoor.
At the same time, employees should know whether they are being paid a fair market rate. Check sites like CareerBuilder, Glassdoor or Salary.com, and give colleagues a range, allowing them to point you in the right direction without giving away their exact salary.
Overcome your fear of uncertainty
Break through your own personal fear barrier. “Lobbying for a raise can be stressful even in the best of times, and the added pressure of economic uncertainty can make it even more so,” said Thom Wright, global master coach at Ezra Coaching, a virtual coaching app owned by Lee Hecht Harrison.
Take a moment to pause and reflect, assess your performance and articulate what you can bring to the company, he said. It’s also important to understand your company’s position, Wright said. “What matters to them? What’s valuable to them? Don’t assume that employers are aware of your achievements,” he said.
Have you, for instance, taken on extra responsibilities without any promotion or pay raise? If so, you would not be alone. Three quarters of workers said they have taken on a bigger workload without receiving extra money, according to a survey by Jobsage, a workplace review site.
Look beyond financial incentives
In the meantime, keep an eye on hiring trends within your own industry. “Layoffs and cost-cutting measures in the tech sector are having a ripple effect on business services like advertising, legal services, and business support services”, Julia Pollak, chief economist at ZipRecruiter, said in a statement.
This week, CNN
WBD,
said it would cut its workforce by a single-digit percentage, which would equate to roughly 400 staff members at the company, which had around 4,400 employees before the layoffs were announced.
The tech sector has also been cutting costs. In early November, Tesla
TSLA,
founder Elon Musk fired 7,500 Twitter staff members — nearly 50% of its global workforce. Facebook’s parent Meta
META,
recently announced it would lay off 11,000 workers, equivalent to 13% of the social-media company’s employee base.
If finances are tight for your employer? Don’t give up. There are other forms of compensation your manager might be able to offer you, such as a learning stipend and career coaching. That could improve your professional skills, and eventually set you on a path for promotion and future pay raises, Heitmann said.
(Jeffry Bartash contributed to this report.)
