Corporate america and 3% raises

[jjquantz]

In some (technical) industries there is another way to get those top raises without giving up your life but it's risky. That is, you have become "the smartest guy in the room". The one guy that always knows the answer, the guy that is never wrong. The problem is that this can be precarious. The company is sold, there is a major reorg, or you stop being right. Can be fun while it lasts, according to a couple of people I observed with this status. Come in late, leave early, get big raises, get the interesting questions. But the end can come quickly.

 

[CRLLS]

One change in management, even only 1 level up, can quickly change the dynamics of any company/workforce. Increases are determined by the accountants, not the everyday bosses. If you are the greatest one in the dept, expect just a little more than average. Not 2x or 3x. I would like to think that I was one of those greatest ones. I always got what I thought was a fair raise. However the increases was not proportional to the extra work effort and responsibility.


40+ years ago (remember those days of DB pensions?), I had a teacher that said: "Never stay at the same job (position) for more than 3 years nor less that 1-1/2 years". I never followed his advice. In retrospect, especially in today's job climate, I think he was right.


If you can get the 15% somewhere else, I'm another that says, take it to the bank grinning all the way. There is only one person looking out for your best interest, and you know who that is! But don't go thinking that things will be different at the new job. Consider it only another 3-4 yr gig.


BTW, I did take another job back in the day, for a 33% increase. It lasted 8 months before they shut down the business! So be careful out there.

 

[athena53]

But, in my case, I think I'm just at the peak of my salary range, and the only way to get significantly more is to take on more responsibility and get a promotion, or walk, and take my chance out there in the job market. And that's a toss of the dice. I could hit the jackpot, or I could crap out!

At least you know that you're at the peak of your range. I had a coworker who was at the top of the range and, in our company, was thus not eligible for any raises or annual bonus. Naturally, I did not want to find myself in a similar position so I asked an HR person what the top of my range was. She replied tartly, "that's confidential information and no one has access to it". No one? Umm, OK.

I definitely flatlined the last 5 or so years of my career. I didn't even do well when I made a move- had applied for internal positions within the company with no success (I was located in a satellite office and even if I'd wanted to move to the HCOL areas where the hot jobs were, I was at a disadvantage because they'd have to move me). So, I jumped ship and took what I could get, which was barely a lateral move.

I agree with the others- if you can get 15%, grab it, but make sure it's apples to apples- comparable working hours, you're comfortable with the culture, the raise won't be eaten up by higher contributions to medical insurance or giant deductibles. DB pensions shouldn't be underestimated; an annuity of $10K/year beginning at age 65 is worth $250K according to one site I checked- but there's no guarantee they will continue that plan or that they'll keep you around long enough to vest in it.

 

[Big_Hitter]

; an annuity of $10K/year beginning at age 65 is worth $250K according to one site I checked- but there's no guarantee they will continue that plan or that they'll keep you around long enough to vest in it.

I think it's closer to $125K, no cola at 4% at 65, so the PV at a younger age will be less.

 

[athena53]

I think it's closer to $125K, no cola at 4% at 65, so the PV at a younger age will be less.

Thanks- you've got more expertise in this area than I do!

I've got two small pensions- one from a large corporation I'll call Giant Enterprise, which I managed to accrue just before our unit was sold, for $10K/year starting at age 60 (no increase if you started later) and another I haven't started yet from a very large financial services company, which I managed to accrue just before they downsized me. That will be $12K/year if I wait 2 more years and start at age 65. Stuff happens; I'm glad I got even these amounts.

 

[kgtest]

Much of corporate America has moved to pay grades...bands. Based on your salary, you are either in the bottom, middle or top third of your band. If you exceed performance there is the opportunity to receive beyond the standard amount. If you want to increase your salary over 5-8%, you must either earn a promotion and take on additional responsibilities or leave your present employer. It's the way of the world these days.

I like the promotion angle. I will begin pursuing that. The job is not actually all that bad.

I wouldn't expect anyone to counter offer and agree you need to be ready to walk.

I suspect I am on the higher band of pay in comparison to the others in my group. I tried to get even $5k more of salary when I was hired 6mos ago and they wouldn't budge. At the same time, I have avery niche and unique skill that is extremely hard to come by in my location. Not many of us in town and most in my niche likely work a lot harder, but also prob make a bit more than I do. I look at GlassDoor etc...and I look at my resume, and I begin to notice I am almost over qualified. This leads me to believe the flat line has somewhat begun, unless I work the promotion angle.

 

[kgtest]

I was stuck in that hamster cage for a few years. The descriptions about bands and so on are strikingly familiar. If you can change jobs and get 15% more, you should do that. Or resign yourself to <3% yearly. I think the 15% yearly bonus is worth staying for, but that's just me.

I never found a competitive substitute job. Things have been thinning out in my profession for a very long time. Things change, so be creative.

I found another 10% or more for three years, by enrolling in a generous tuition program. Shortly after I completed, megacorp reduced the benefit. Not the company is being sold, and many benefits will disappear.

I was kicked to the curb, but it's been a nice transition. In 2016 I will earn 15% more than my best year at megacorp. This is with a smaller competitor. The fact that it is 15% more is somewhat ironic.

Maybe another bank will buy your's, and you will get that 15% boost. However, it is probably an even bet that you will lose your job. Stuff happens.

Instead of busting hump for another 1-2%, it is far better to invest your human capital in some kind of self-employment, IMO. That has worked during a lifetime for us.

I like your way of thinking. It definitely has to do with the pay bands. I doubt our bank would ever sell...we actually acquired a bank and branches this past year.

 

[kgtest]

I think it's closer to $125K, no cola at 4% at 65, so the PV at a younger age will be less.

I suppose I would have to look at how long it takes me to earn 125k. The pension is well funded I am told. I could get into the specifics but it might be a tell on the bank I work for and I am trying to keep that anon.

I can say the pension looked to be modified as there is a "grandfather" rule that includes the baby boomers but not genX. So that tells me if it happened once, it can happen again. Takes 10yrs to get vested...I would make a million in that time and so that 125k really comes out to about 10% of my earnings from the company.

Lots to think about but I have a very young family so it seems to make sense to stay put for a few years for now. I suppose not too many people leave after a 15% bonus though...

 

[HFWR]

3% is 2-3% higher than any of my "raises" over the last fifteen years or so...

 

[Big_Hitter]

Takes 10yrs to get vested......

the maximum statutory vesting schedule under ERISA for a DB plan is 5 year cliff - not sure how you get the 10 year requirement

 

[photoguy]

I worked at various consulting megacorps and pretty much always received raises in the 5-15% range. That wasn't unusual (for above average or better evals), just the nature of the company. I think it just depends on your specialty and how much competition there is for labor.

Sent from my Nexus 5 using Early Retirement Forum mobile app

 

[Hamlet]

I don't buy this 3% raise BS. I can EASILY go get a job that pays me 15% more. Do I wait out these 3% raises in lieu of a Pension in 10 years...and an opportunity to receive a 15% bonus every year..or do I walk and increase my bottom line?

am I way out of line for complaining about this or are other bank employees receiving similar raises at or around 3% ??

A lot depends on where you are currently salary-wise. Most of us flatten out at sum point. I got massive raises as a network engineer in late 90s. Low starting salary + hot area + pretty good at it = massive increases.

I've reached a point now where I'm not going to get big raises without a large increase in PITA. I'm kinda maxed out for someone who wants to avoid travel, work a normal number of hours in the week, and wants the stability of Megacorp. My current employer also has a huge advantage in that I have almost no commute to get to the office.

If you are still making modest money and are hungry for more, though, I'd test the market. There is no harm in seeing what is out there to keep your employer honest. You just have to decide if the additional money is worth disrupting your life.

 

[harley]

I was with one company (although various incarnations of it) for about 25 years. During that time I got one big pay jump when I came in, followed by a lot of years of 2, 3, or up to 5% (when I would get a promotion) raises. Then at one point (mid 90s) I jumped from the old time megacorp to the internet provider part and got a nice promotion and big raise from that, followed by quite a few more years of standard raises. I once calculated that of my final salary compared to my salary just before starting there, almost 50% came from those two job change moves. It's just life in the corporate world.

I did know a number of people that jumped companies multiple times, and they definitely were getting paid more than me. But they also tended to be the first ones laid off during bad times. I'm not sure who ended up ahead financially, but I preferred a bit more (at least perceived) security.

 

[Big_Hitter]

you could always try a headhunter that works in your area of specialty - ask him/her if you are being underpaid

 

[kgtest]

I'm a government contractor, and I've been stuck in the 3% rut since 2012. Here's a rundown of the raises I've gotten, for as far back as I can trust my memory, at least...

9/09: 5.0%
9/10: 4.2%
9/11: 4.6%
9/12: 3.0%
9/13: 3.0%
3/14: 1.8% (6 month)
3/15: 2.9%

I can still remember going to a company meeting back in 2009, just before we got our raises, and the manager was trying to comfort us, warning us that the raises weren't going to be so hot this year, because of the economy and the Great Recession and such. So needless to say, when I got that 5%, I was thrilled!

Even though the 2010 raise was smaller, I was still happy with it, and when the 2011 raise was a bit bigger, I thought it was a sign of good things to come.

When 2012 came around, I figured that, with the way the economy is finally taking off, the raises would be even better. Needless to say, I took that 3% as a slap in the face.

But, in my case, I think I'm just at the peak of my salary range, and the only way to get significantly more is to take on more responsibility and get a promotion, or walk, and take my chance out there in the job market. And that's a toss of the dice. I could hit the jackpot, or I could crap out!

My path has been a bit different, I have "job hopped" about 5times in the past 8years of my IT career. Looking at my income progression I can see why I was originally unhappy with the 3% but with the bonus added in, it doesn't look as bad if I compare income gains yr over yr.

2007(unemployed / construction) BASELINE-0
2008(began IT) +78.67%
2009 7.38%
2010 5.28%
2011(found new job) 23.49%
2012 11.81%
2013(1 yr contract job) 11.85%
2014(found new job) 10.36%
2015(unemployed 3mos, new job) -13.70%
2016-Projected 37.54%
2017-Projected 9.32%

I didn't have a college degree, and I burned about 6yrs working a low paying construction job. I set a goal after leaving construction that I would earn six figure salary by the time I was 35 and thankfully reached it a cpl years early. I guess I know what I need to do to get more than 3% as I have done it in the past. The bonus and benefits might actually be worth more than increasing my base salary... I know I could bow out anyday and that doesn't help. it takes a few months to acclimate to new jobs and its stressful, so I ask is it worth it...I dunno.

 

[Texas Proud]

I have seen this kind of argument before and see it a bit in some posts here...

The company is making bookoos of money and my raise should be much higher than they are giving.

REALLY? Just because the company is making money does not change what your job is worth. If your job is worth $50 to $60K, then you should be paid in that range... if your job is worth $150 to $200K, then that range... what the company makes or loses should not be a discussion of your salary....


Now, it can be for top execs or if there is a bonus plan in place that says they will pay more if they earn more.... but that is not 'salary'....


BTW, I do not see people argue that the company lost money the past year so I should give back some of my salary... sure, some companies have done that, but the employees are kicking and screaming when it happens...

Salary is a pay to you for a job you do... period... Now, some companies value that job more than others, which is why you can get a higher salary at some than others... but, still, pay for your work.

 

[EvrClrx311]

Learned this very early on in my career... it's annoying to have to do, but if I don't have a closed door talk with my boss about what I perceive my value to be, I won't get what I am worth. The conversations usually go like this:

"I appreciate the positive appraisal. I was curious what the company average raise was this year."
( he then talks about how difficult it is on everyone, blah blah blah, I politely let him finish)
"Well I just wanted to know if there was anything I could have done better. I enjoy working here and I feel I've accomplished a lot. I'd love to continue working here, but I know I'm worth ______"

Almost always this pressure leads to a few percentage points more.

Earlier on in my career my boss told me "this is just how it's done..." as it relates to the 3-5% raises. I countered him with a question "would you mind projecting my salary forward for 20 years with this raise and let me know if it matches what others who are 20 years older than me are currently getting?"

I guess the numbers didn't add up... he doubled my raise that year, and the following year I didn't even need to ask.

It's unfortunate, but as they say... the squeaky wheel

 

[Options]

The only thing I really disagree with is that this is anything new. It's always been this way.

-ERD50

This is not true. It's no secret that the last 40 years have seen a prodigious erosion of employer loyalty to workers (the employer/employee pact). Only during this time have organizations perfected the strategic use of compensation, benefits, restructurings, reorganizations, position eliminations, etc., with employees always on the losing end. This change accelerated greatly during/after the Reagan years (had little to do with politics, however). Between 1930-1980, the U.S. led the world in many aspects of worker wages, benefits, security and standard of living. That is no more, and will be no more.

In the accumulation years, your human capital is probably your greatest asset. With few exceptions, viewing your employer as disposable as they view you will work to your greatest advantage. Add value and work continually to increase and continuously market that value, but always sell said value only to the highest bidder in the labor marketplace. Again, be loyal to good bosses and people, who will always be your greatest resources. Reward loyalty only to those employers who reward you in kind (compensation/benefits/perks/career development/promotion opportunities), and only for as long as they do so.

 

[Chuckanut]

In the accumulation years, your human capital is probably your greatest asset. With few exceptions, viewing your employer as disposable as they view you will work to your greatest advantage. Add value and work continually to increase and continuously market that value, but always sell said value only to the highest bidder in the labor marketplace. Again, be loyal to good bosses and people, who will always be your greatest resources. Reward loyalty only to those employers who reward you in kind (compensation/benefits/perks/career development/promotion opportunities), and only for as long as they do so.

Options - You make too much sense. Obviously, you are a dangerous radical!

 

[dunkelblau]

we had a guy go in to the bosses office (this was 25 years ago) and say "hey, I got an offer from one of our competitors but I don't want to quit"

boss called the competitor right there and they pulled the offer

DOH

I did exactly the same thing around that time, and my boss's reaction was a bit different-- he asked me to wait 24hrs before accepting, and to my surprise he topped it. Around here last word goes to the first offer, and in my case they declined to enter a bidding war. My dad advised against taking a counter, and when I did, he suggested I keep looking because my days are numbered due to disloyalty. Again to my surprise over the next decade I got raises faster than I expected. I stopped looking after an outside offer actually came in below my salary (fancy title and potentially faster growth but taking it meant admitting I was overpaid).

I later found out how sensitive raises are to flight risk, and how HR has a pretty good idea who these are. I'm not convinced flatlining implies age discrimination, I think long tenure puts someone low on the flight risk scale according to the model, plus we're less motivated by raises near the finish line. Instead the occasional large lump sum works for me, and being FI and having expertise in a hot area means making ER noises to get on a retention program. For me this beat taking on a manager's headaches-- or climbing the learning curve someplace new at my age.

 

[Options]

Learned this very early on in my career... it's annoying to have to do, but if I don't have a closed door talk with my boss about what I perceive my value to be, I won't get what I am worth. The conversations usually go like this:

"I appreciate the positive appraisal. I was curious what the company average raise was this year."
( he then talks about how difficult it is on everyone, blah blah blah, I politely let him finish)
"Well I just wanted to know if there was anything I could have done better. I enjoy working here and I feel I've accomplished a lot. I'd love to continue working here, but I know I'm worth ______"

Almost always this pressure leads to a few percentage points more.

Earlier on in my career my boss told me "this is just how it's done..." as it relates to the 3-5% raises. I countered him with a question "would you mind projecting my salary forward for 20 years with this raise and let me know if it matches what others who are 20 years older than me are currently getting?"

I guess the numbers didn't add up... he doubled my raise that year, and the following year I didn't even need to ask.

It's unfortunate, but as they say... the squeaky wheel

I love the part in red above; it's how negotiations should be done.

You can do this, but you'd better be prepared to back it up. Quite frankly, the last thing an employer is interested in is how much you think you're worth. What you should always be demonstrating throughout your career, to your current employer and the next, is how much value you add to the organization. Specifically, employers are interested in how you make/have made things cheaper, better, or faster. If your resume doesn't spell out with numbers how you have done any or all (ideally) of these three things, you're just another applicant (or employee).

During the last 3 months before performance reviews in particular, you should be completing projects, demonstrating your accomplishments, and make d*mn sure your boss (and other key stakeholders) know about it (without appearing too self-serving, of course).

During negotiations, always (a) ask for the salary range; and (b) ask for an amount 10% above that. Doubling one's salary is unheard of, and I had access to it all in my career (employers have budgets, unless they're a small, unorganized business, and even then doubling a salary almost never happens). If the employer you're negotiating with doesn't go for the 10%, ask for extra weeks of vacation, or take the salary and ask for a review with possible increase after 6 months, or a car allowance, or whatever. Never take their first offer. Ask politely, naively, curiously, but always ask. OTOH, employers don't like squeeky wheels, they like people who add value and who know how to demonstrate it.

 

[kgtest]

I can appreciate the value add comments. I've always felt that if I was going to ask for "more' I better be able to prove my value.


I think I screwed up when I didn't fight harder when I was hired. My year-long view is to show-up, do good work, add value that saves the company either time, money or both and then make sure that value is noticed by the right people. I will be candid with my manager before my next review about the value I've added and the positive effects it had. Then if that amounts to a denial or less than satisfactory results I will attack the promotion angle, pointing out that the other folks I work alongside and their titles are not aligned with the work I actually do. This to me is a clear difference in terms of my peers, I focus on more technical skills where the few others with the same title focus on more "soft-skills".


If again, the results are less than satisfactory...plan-c will be in the back pocket which will include an offer letter I am ready to accept.


I've worked for employers who don't get it, bosses who don't get it and I've worked with those who do get it. it seems the bosses that I've had the strongest personal relationship tend to fight a bit more for my well-being.

 

[MasterBlaster]

Nominal Vs Real Raise - You Need to Normalize your raise by Inflation

Nobody seems to have mentioned that inflation has been falling. So even though nominal raises are getting smaller your "real" raise may not be falling.


Would you prefer a 10 percent raise with 10 percent inflation. Or a 2.5 percent raise with less than 1 percent inflation ? The nominal value isn't as important as the real value

Take a look at this chart of CPI-inflation Consumer Price Index Data from 1913 to 2016 | US Inflation Calculator

Look at the numbers in the second to last column:

 

[mpeirce]

Would you prefer a 10 percent raise with 10 percent inflation. Or a 2.5 percent raise with less than 1 percent inflation ? The nominal value isn't as important as the real value

Sadly, there are many people who are much happier with the former rather than the latter.

The same goes for saving interest rates.

Math skills are not dominant in humanity. Present company excepted.

 

[enginerd]

I actually have all my raises in a spreadsheet, so it was easy to pull up. My company raises take effect on Jan 1 every year. I've never been "promoted", which is still kind of odd to me. My title has gone from assistant civil engineer, to staff engineer, to senior engineer, and now Associate Civil Engineer. But no one ever told me 'Congratulations, you are now a ___', I was only able to see my title changes by looking at my HR profile and noticing that they had changed. But I'm not complaining, they've been taking care of me with compensation.


(salary) (bonus + salary)
2016 8.9%
2015 3.4% 6.8%
2014 17.3% 14.3%
2013 6.8% 18.0%
2012 3.3% 12.4%
2011 2.3% 3.8%
2010 1.0% 6.3%
2009 3.8% 0.7%
2008 7.7% 9.8%
2007 27.5% 24.3%
2006 6.3% 13.8%
2005 6.9% 9.7%
2004 4.9% 8.4%
2003 6.6% 10.5%

(sorry for the formatting, I just copy and pasted)