Hewitt Associates is saying that companies are not planning above average base pay increases in 2008 thanks to rising health insurance costs. This is the same reason I’ve heard over and over again.
Average employees have nothing to look forward to in terms of raises, as perhaps they shouldn’t have. Even above average employees will likely have nothing but a modest increase in base pay. There’s often discussion about how today’s company workers do not remain loyal to their companies for years on end, compared to previous generations of workers who have company loyalty ingrained in their philosophy. But loyalty has to be earned, and corporations must act in a way that shows their employees are their most valuable assets.
Here are some options if you’re not expecting an above-average pay increase but are happy in your current position.
Two options for changing the company’s behavior:
Negotiate a higher bonus. Companies are starting to prepare their budgets for 2008. If you are a star performer — or if you just finished working on a successful project that has benefited the company in some way — now is the time to schedule a meeting to remind your boss of your recent accomplishments. While salary is a fixed cost for a company, there may be more room for negotiating one-time expenses like bonuses.
Negotiate something else. Working from home one day a week may save wear-and-tear on your vehicle, money for gas and tolls or mass transportation, and time. If this is a possiblity for you, find out if your company will approve it. Perhaps more vacation time would be a negotiable point.
Three options for changing your own behavior (giving yourself a raise):
Make fun money. Don’t rely on a company to provide you with more money. Find a way to make some extra money with your favorite hobby or activity. If you like what you do at work, do some related consulting on the side (steering clear of relationships conflicting with a non-compete agreement you may have signed at one point).
Revisit (or create) your budget. There are two reasons to want more money from your job — to save more for the future or to pay for increased expenses. Cut back on unnecessary expenses — perhaps expanded digital cable with premium channels or super high speed internet. Deposit the saved money into savings automatically each month or use it for a necessary expense. If you’ve never created a budget before, give it a try. You may be able to locate “lost” money on a monthly basis.
Adjust your withholding. If you find that you, like many households, receive a tax refund from the government every April, perhaps you would benefit from adjusting your withholding to be able to keep that money as you earn it. This way you’re not giving an interest-free loan to the government, and you have use of your money for paying expenses or investing. Use this withholding calculator to determine your optimal exemption amounts.
Whether or not your employer pays you more, your expenses will go up year after year (if not controlled and reduced) for any reason other than inflation and the second law of thermodynamics. The difference has to come from somewhere, and hopefully the solution does not involve the depletion of savings or the use of credit.
Updated June 23, 2016 and originally published July 5, 2007.