Pay Raise Calculator
A three percent raise in a four percent inflation year is a pay cut, even though the number on the payslip went up. This shows the raise in cash and in real terms side by side.
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Nominal and real
The percentage on the letter is nominal. What matters is whether it outpaces the rising cost of the things you buy. The break-even figure is simply the inflation rate: anything below it means your purchasing power fell this year despite the raise.
Why raises compound
A raise is not a one-year event. Every future raise is calculated from the new base, and so is any percentage-based retirement contribution and match. Negotiating an extra one percent early in a career is worth considerably more than the same percentage later, because it compounds through every subsequent increase.
The promotion gap
Internal raises have generally trailed the increase available by changing employer, which is why job-switching has been the faster route to higher pay for many people. That is a market observation rather than advice — there are good reasons to stay — but it is worth knowing the comparison exists.
Look at total compensation
Retirement matching, health premiums, bonus targets and equity move independently of base salary. A modest base raise alongside an improved match can be worth more than a larger raise without it.
Frequently asked questions
What is a good annual raise?
Enough to beat inflation is the minimum for standing still. Typical merit increases have often run in the low single digits, with promotions and job changes producing larger jumps.
How do I calculate a raise percentage?
Divide the increase by the old salary and multiply by 100. Going from $65,000 to $67,600 is $2,600 over $65,000, which is 4%.
Is a cost-of-living adjustment a raise?
Not in real terms. It is designed to hold purchasing power steady, so it leaves you where you were rather than ahead.