Inflation, your market rate, and the quiet message your company just sent

Three percent is the raise most people get, and most of them say thank you. Before you do, run three numbers, because a 3% raise in a year with 3% inflation is a 0% raise with a nice email attached.

That is not an insult by itself. It is the default. The question is whether the default is what you earned, and the only way to know is to check it against something other than last year's salary.

The inflation check

Subtract this year's inflation rate from your raise. If the result is near zero, your pay did not go up; your employer held you in place and called it a reward. If the result is negative, you took a pay cut and signed a thank-you note for it.

The market check

Your market rate is what it would cost to replace you, not what you made last year plus a little. Salary ranges are posted on more job listings every year, so pull three postings for your role and level and look at the midpoint. Thirty minutes of looking will tell you more than a year of wondering. If you sit below it, 3% is not closing the gap. The market moved too, so the gap is wider than it was in January.

The compression check

Companies pay more to hire than to keep. If someone at your level was hired above you, every 3% raise locks that difference in. Say the gap is $10,000. Over ten years of matching 3% raises, that one gap adds up to roughly $115,000 in pay you never saw, before counting the bonus and retirement match calculated on top of it.

What the number is saying

A 3% raise usually carries one of three messages: "You are fine where you are," "Nobody fought for you," or "Nobody asked." Only the third one is good news, because it is the one you can fix in a single conversation.

Picture a director earning $150,000 who gets the standard 3%. The person hired onto her team eight months ago came in at $162,000. The gap is $12,000 today. After both of them get 3%, it is $12,360, because 3% of his salary is more than 3% of hers. Nobody in that chain did anything wrong, and she is still falling behind.

What to do before you say thank you

Ask for the band. "I'd like to understand where I sit in the salary range for my level." Most managers will tell you, and the ones who won't have told you something too.

Bring the three numbers, not your feelings. "The midpoint for my role is X. I'm at Y. What would it take to close that this year?" You are asking a question about math, which is much harder to deflect than a question about fairness.

If the answer is "budget," ask for a date and a number, and ask for them in writing. A manager who means it will give you both. A manager who doesn't will give you neither, and that is also an answer.

What did your last raise say?