Average Raise Percentage: What Factors Affect Your Raise?

The quality of a salary is in the eye of the receiver, whether that's how much you're entitled to or when you should ask for more. But there are ways to set yourself up for success when it's time for your annual review.

If you've built up the courage to ask your boss for a raise, what should you do next? And what exactly counts as a good raise? Keep reading to find out more about salary increases, what the average percentage for a raise is, and what factors affect compensation.

Key Takeaways

  • Make sure you're prepared if you're going to ask your boss for a raise.
  • Pay increases tend to vary based on inflation, location, sector, and job performance.
  • Most employers give their employees an average increase of 3% per year.
  • Consistent job switching may have an impact on the rate at which your salary increases.
  • Your paycheck shouldn't be the only thing on your radar, so don't forget to consider benefits and other forms of compensation.

Average Pay Increases

The COVID-19 pandemic caused huge disruptions to the global social and economic systems. As a result, in many places, pay raises and the changes to cost of living didn't sync up.

CNBC reported that pay raises didn't match the increases in the cost of living during 2021. But as employers struggled to find workers to fill open positions and inflation increased, that changed in many industries.

In 2022, the Conference Board expected compensation costs (which generally include salaries, raises, and benefits) to jump 3.9%. This was the highest level reported since 2008. This boost is being driven by higher inflation and more people in the workforce. A separate survey conducted by Willis Towers Watson showed that many companies planned on offering their employees larger raises in 2022 while only 3% planned to halt raises altogether for the year.

According to WTW, corporate executives, management, professional employees, and other support workers could expect raises as high as 3% while salaries would increase by 2.8% for production and manual laborers. The highest salary increases were projected for pharmaceutical employees, to the tune of 3.1%. Retail companies estimated the lowest amount of increases, with salaries projected to rise by 2.9%.

On average, this works out to about a 3% increase in salary for workers in most industries. If you are hoping for a salary bump in 2023—especially if you didn't get one in 2022—this is a reasonable figure to aim for.

Your salary isn't the only form of compensation that you can receive. If a traditional raise isn't possible for your employer, consider proposing an increase to your paid vacation, paid health care, childcare subsidies, measurable performance bonuses, retirement benefits, and other forms of compensation.

Factors that Affect Raise Percentages

Pandemics and special circumstances aren't the only factors that can hurt your chances of getting a raise. Here are a few other factors that often prevent companies from increasing their employees' salaries.


Inflation is one of the biggest factors that affect people's compensation. Put simply, this is the increase in prices within the economy as a whole. Although it seems negative, moderate inflation is a normal part of the way the economy functions. But it can be detrimental to people when it rises too fast.

Consider the situation in December 2021, when the Consumer Price Index (CPI), which measures overall cost increases in the economy, rose 0.5% from the previous month and 7% from December 2020. When you remove food and energy prices, the index rose 0.6% from the previous month and 5.5% from the previous year.

When prices increase on this kind of scale, one dollar doesn't go nearly as far. People generally expect to get paid more in order to keep up with rising prices so they often rely on pay raises. But that may not always happen as costs for corporations also rise. It's important for you to review your compensation package and discuss your situation with your employer.

The length of time you've been at your job can impact your ability to get a raise. Most employers give their employees a raise after the first year and each year thereafter. According to a CNBC report, pay raises increased between 2% and 3% since 2010.


You probably know the saying "location, location, location." That doesn't just apply to where you should set your real estate goals. It also has a bearing on your starting compensation as well as how much your salary bumps up.

According to the Bureau of Labor Statistics (BLS), wage and salary rates increased 4.6% between September 2020 and September 2021. That category increased at a pace of 6.5% in Los Angeles. But wages and salaries increased by only 3.3% during that period in San Jose.

But what if we leave California altogether? Here are changes in salaries and wages for the same period in the following municipalities:

  • Detroit: 2.7%
  • Boston: 4.2%
  • Seattle: 2.5%

Job Sector

The average performance-based raises don’t change significantly across different sectors or job types, but they do vary slightly. The BLS regularly updates employment costs for civilian workers, private industry, and government workers at the state and local levels. These costs include overall compensation, wages and salaries, and benefits.

For the 12-month period between September 2020 and September 2021, the BLS reported salary and wage costs increased:

  • 4.2% for civilian workers
  • 4.6% for private industry workers
  • 2.4% for state and local government workers

Job Performance

How you're compensated depends on how well you execute your job duties and responsibilities. So if you meet or exceed your goals, you may be entitled to a raise. Incremental increases in salary, which are commonly done on an annual basis, incentivize employees to work hard(er) and stay with their employers. Pay raises that are based on your job performance are called merit increases.

Employees who meet their goals and meet the company's expectations are generally entitled to a 3% increase, which is the national average. Some employers may only offer a nominal increase of 2% to some workers while others may receive a jump of 5% or more.

If you want to ensure that you're in the running for a merit increase, ask your current or prospective employer and read up about your compensation package in your employee handbook or employment contract. When it comes time to ask for a raise, your employer may want you to back up your argument. You can do this by documenting all your achievements and keeping track of how competing companies are compensating workers in the same position.

People who depend on bonuses as part of their compensation package may not be able to keep pace with inflation unless the bonuses are large.

The Effect of Job Switching

Maximizing your earnings over a long period of time usually means changing jobs rather than staying in place. It used to be that jumping ship meant landing a salary 10% to 20% higher than your previous one. While sizable increases aren’t as widespread as they used to be, switching jobs is still the most common path to the best pay raise.

If you stay at the same organization, your annual increases may be restricted by your current base pay because companies have a narrow percentage range within which they can boost your pay. But if you negotiate with a different firm, you won't be bound by those restrictions. The key is to prove that you’re worth the salary you want.

If you receive a competitive offer from another job, let your current employer know that you are considering leaving. If they want to keep you, they may be willing to match the other offer, which can still save them money over hiring and training a new employee.

Other Forms of Compensation

When sizing up your wage, bear in mind that an uptick in base pay isn’t the only way that companies reward their employees. In some cases, you may actually fare better with a generous bonus instead of a big raise.

Consider someone with an annual salary of $80,000 and a modest 1% salary increase. That means their base pay only increases by $800, which probably isn't enough to keep up with inflation. But if that employee also takes home a $4,000 bonus, their total compensation jumps 6% (1% base-pay increase plus 5% bonus). Based on nationwide figures, this reward would have been better than what most top-performing employees would receive.

Keep in mind that a significant number of companies are now emphasizing non-financial rewards such as career-development programs. While these opportunities may not increase your bank account in the short run, they can be important ways to maximize your future earning potential.

When to Ask for a Raise

The best time to normally ask for a raise is during your performance review. Most companies hold meetings with their employees to discuss their performance at the end of the year, so that's always a good time to see whether you're able to negotiate a raise. But if you feel that you've made some stellar moves in your position, you may be in a position to ask for an increase before or after your review.

It's always a good idea to wait at least six months from starting a job before you start asking for pay increases. This minimum time frame allows you to establish a track record in your position and demonstrate the skills and qualities you bring to your job to your employer. But remember, you're more likely to get a raise after you have been with a company for at least a year.

How to Ask for a Raise

Just because you ask for a raise doesn't mean your employer will give you one. You need to be able to demonstrate why you have earned one. To make your case convincingly, spend some time preparing before you sit down and ask your manager for a raise.

Asking for a raise shouldn't feel confrontational. You aren't arguing against your employer. Your goal should be to show them the value that you add to the company and then be reasonably compensated for that value.

Do Your Research

Look for concrete numbers to show how much you could be earning at another job. You might also want to talk to your coworkers and see how your salary compares to theirs. This will also allow you to address any pay gap between your salary and coworkers that do a similar job.

Show Your Worth

What have you accomplished for the company in the last six months? The last year? Since you started working there. Be ready to describe not just your accomplishments at work, but how they have benefited your employer's mission, clients, and bottom line. If you can, present your case with concrete numbers, such as new clients brought on board, increased employee retention, or specific sales revenue. Having hard data will make it harder for a manager to say you haven't earned a raise.

Have a Plan for the Future

You may want a raise so you can pay your rent or add more to your kid's college fund. But your employer wants to know how they are going to benefit. Show them that you'll continue to add value by having a clear plan for what you want to tackle in the coming year.

Present clear goals that build on your past accomplishments. Let your manager know what you have planned and how it will benefit the company. Show them you are genuinely dedicated to your work and invested in bringing value to your employer.

Put Things In Writing

Your direct manager may not be the person who can sign off on giving you a raise. Chances are, they have to take any requests for pay increases to their boss. No matter how much they want to give you one, they won't be able to unless that boss says yes.

Put your request in writing and bring it with you to the meeting. Include concrete information, such as your current salary and how it compares to others in your field. List hard data that demonstrate your accomplishments. Outline your goals for the future and how they will benefit your company.

You'll help your manager to make a stronger case if you can provide them with everything that you used to make your case to them.

How Much of a Raise Should I Ask for?

How much you ask for depends on how long you've been with your employer and your role with the company. It's always a good idea to ask for anywhere between 10% to 20% higher than what you're making right now. You may be able to ask for more based on your performance, length of time with the company, and other factors. Make sure you come prepared when you negotiate your raise and be confident. If your employer rejects your request, you can always lower your target.

Is Asking for a 10% Raise Too High?

A 10% raise is well above average, but it might not be unreasonable. Depending on how long you've been with the company and when you last received a raise, you might be entitled to far more compensation than you're currently receiving. If you plan to ask for a large raise, you'll need to have plenty of data to back up your request, including concrete numbers that show the value you've added to the company.

Can I Be Fired for Asking for a Raise?

It isn't illegal to fire employees because they asked for a raise, but it would reflect poorly on the employer who did it. Especially given the existence of websites that allow employees to share information about employers, it is a risk most companies wouldn't want to take. If you are worried about asking for a raise, talk to your coworkers and ask about their experiences with requesting or receiving a salary increase from your employer.

The Bottom Line

An annual pay increase of 3% may not sound substantial, especially when compared to inflation and the rising costs of necessary goods and services, such as healthcare. But in today’s environment, it's better than anything. Over time, relatively small raises will compound and may very well result in a very nice salary. And if you feel like you're not being paid as much as you deserve at your current job, that may be a sign that it's time to look for a new one.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. CNBC. "How inflation is changing the 2022 annual employee pay raise equation."

  2. The Conference Board. "2022 Salary Increase Budgets Are the Highest Since 2008."

  3. WTW. "U.S. employers planning larger pay raises for 2022, Willis Towers Watson survey finds."

  4. U.S. Bureau of Labor Statistics. "Consumer Price Index News Release."

  5. CNBC. "How inflation is changing the 2022 annual employee pay raise equation."

  6. U.S. Bureau of Labor Statistics. "Changing Compensation Costs in the Los Angeles Metropolitan Area – September 2021."

  7. U.S. Bureau of Labor Statistics. "Changing Compensation Costs in the San Jose Metropolitan Area – September 2021."

  8. U.S. Bureau of Labor Statistics. "Changing Compensation Costs in the Detroit Metropolitan Area — September 2021."

  9. U.S. Bureau of Labor Statistics. "Changing Compensation Costs in the Boston Metropolitan Area – September 2021."

  10. U.S. Bureau of Labor Statistics. "Changing Compensation Costs in the Seattle Metropolitan Area – September 2021."

  11. U.S. Bureau of Labor Statistics. "Employment Cost Index Summary."

  12. Indeed. "How To Earn a Merit Increase at Work (With 6 Steps)."

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