Credit Sesame discusses why now is the time for you to get a pay raise.
Inflation has forced consumers to make some difficult choices. Do without a vacation this year or try to keep the old car running a little longer instead of buying a new one? Downsize your lifestyle or go deeper in debt to finance it?
There are many other examples. Most families these days feel like they’re running across these hard choices all too often. While finding ways to tighten your budget is a smart response to inflation, there’s also a more positive response: increase your income.
It sounds simple, but as it happens economic conditions have created an unusually good opportunity to boost your earnings. That may be the best break consumers have gotten in a long time.
Raising your income is a better solution than cutting costs
Cutting costs is certainly one solution to higher inflation. However, if inflation keeps up it’s going to start to feel like a losing battle. You keep sacrificing your lifestyle, but before long new price increases overwhelm even your downsized budget.
Raising your income is one way of getting ahead of the inflation problem instead of always chasing to keep up with rising prices. It’s almost a case of “if you can’t beat ’em, join ’em.” One cause of today’s high inflation is a tight labor market. Rather than being victimized by that, it’s something you can use to your advantage. Figure out how to get a pay raise and you may not need to cut costs.
Labor demand is the one economic factor in consumers’ favor
One sign that the labor market is tight is that the unemployment rate is very low. The 3.5% unemployment rate as of July was tied for the lowest since the 1950s, according to data from the Bureau of Labor Statistics (BLS).
Another way to look at the demand for labor is in terms of job openings. BLS data show that the total number of job openings hit an all-time high earlier this year, and is still near that level. The number of unemployed people per job opening is at an all-time low.
The ratio of unemployed people to job openings is worth a closer look, because it really drives home how desperate employers are to find workers.
Right now, there are about twice as many job openings as unemployed people. So, even if every unemployed person in the country had the right skills and was in the right location to be matched up with a job, half the jobs open today would still go unfilled.
All this means that workers are in high demand. Using that demand to get yourself a higher wage could help you keep up with rising prices.
Wage increases can have a compounding effect
One reason raising your income is a more effective way of making ends meet than just cutting costs is that it has a compounding effect.
Wage increases tend to be based on a percentage of your current wage level. So, the size of the raise you earn now may not only increase your income right away, but may also impact your future raises.
Labor hasn’t been in this much demand historically, and it may not be in such high demand in the future. That makes this an ideal time to aim for a higher raise. Capturing this opportunity could earn you even more with each raise you get in the future.
6 Ways to raise your income
Earning more sounds good, but how do you make it happen? The following are six ways of raising you income that might be especially effective in today’s environment:
1. Ask for a raise – the right way
If you’re reasonably happy in your job, the best course might be to try to get a pay raise. Given the strong demand for workers, don’t just go for a routine annual raise. Aim for something that will catch you up with today’s higher prices plus improve your lifestyle a little.
The best way to get an exceptional raise is to present your employer with solid information. Provide examples of how your performance is above average and extra things you do that add value to the organization.
Don’t give your employer an ultimatum, like “give me such-and-such amount or I’ll quit.” If you do that they may decide to let you go, because no one wants to manage an employee with a hostile attitude.
Be positive rather than adversarial. Chances are, your employer is well aware of how hard it is to find replacements in today’s job market. Give them some good reasons why you should get a pay raise, and they should be eager to satisfy you.
2. Put in extra hours
Because workers are in short supply, companies may need their employees to work extra hours. If the nature of your work is that you can earn more by putting in some overtime, those extra hours could close the budget gap caused by higher prices.
This is especially true if you get a higher pay rate for overtime. Working more hours at a higher hourly rate increases your income in two ways. That’s the type of weapon you need to fight inflation.
3. Inquire about promotion opportunities
Besides asking for a raise or working overtime to increase your immediate income, this should also be a good time to talk to your employer about your career path.
Find out what promotion opportunities might be available in the future, and what you’d need to do to qualify for them. Besides giving you some insight as to your potential career with the organization, having this discussion will let your employer know you’re interested in being considered for additional responsibilities. A promotion is a pretty surefire way to get a pay raise.
4. Upgrade your job skills
If you find your job opportunities are limited, look to add job skills that will qualify you for higher-paying positions.
Be realistic and look for add skills that you’d enjoy using and be good at. Upgrading your skills is always a good idea, but it might be especially timely now. Employers that need to fill higher-level slots might pay for you to get the training to qualify for those jobs.
5. Take a look at the job market
If you can’t get ahead with your current employer, see if there might be better opportunities elsewhere. You don’t have to stay with the same employed to get a pay raise.
Employment conditions make this an especially good time to look for a job. If nothing else, checking out the job market can give you a sense of how much someone with your skills and experience can earn, and what you might need to do to make yourself more marketable.
6. Get a part-time gig
The gig economy has created the ability for online or on-demand workers to add some outside work with more flexibility than ever.
Add to that the high demand created by today’s shortage of workers, and you have an ideal time to look for extra work that to help you catch up with fast-rising prices.
The economy has created many hardships for consumers. The demand for workers is one way it’s also creating opportunity. Taking advantage of that opportunity should be a more positive way of fighting inflation than going into debt or continually doing without things you need.
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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.