Do raises keep up with inflation?
Asked by: Cassidy Schuster Sr. | Last update: February 12, 2026Score: 4.2/5 (50 votes)
Yes, ideally raises should keep up with inflation to maintain employees' purchasing power and standard of living, as wages below inflation essentially become pay cuts, but companies often lag due to cost management, leading to higher turnover and dissatisfaction unless merit or market changes drive increases, sometimes requiring employees to switch jobs for significant raises.
Do employers give raises based on inflation?
The average pay raise is 3% to 5%, accounting for inflation and merit increases. Companies are under no legal mandate to give employees salary hikes in line with inflation, unless specified in a union agreement.
What percent should my raise be to keep up with inflation?
Other factors include your employees' skill sets, experience, current market conditions and inflation. As inflation soars, many businesses tend to plan annual payroll increases of four percent or more.
Does raising wages raise inflation?
In practice too, wage increases may increase inflation, but it depends on the size of the increase of the wage and who it goes to. Minimum wage increases, for example, have little effect on inflation given that they are sufficiently small.
How much pay rise to keep up with inflation?
To keep pace with inflation, your salary should ideally increase by the current inflation rate (around 2-4% or higher depending on the period) plus any merit for performance, typically aiming for a 3% to 5% raise for cost-of-living, but potentially higher (6-10%+) in high-demand fields or for significant performance, as standard increases often lag actual price increases. Check your region's Consumer Price Index (CPI) and industry salary data for a precise figure, as a 3% raise may not cover substantial inflation, requiring a larger request to maintain purchasing power.
Expert discusses asking for a raise to keep up with inflation
How much will $50,000 be worth in 30 years of inflation?
$50,000 today will have significantly less buying power in 30 years due to inflation; at a typical 3-4% average inflation rate, it could be worth the equivalent of $125,000 to $160,000 in future dollars just to maintain its current standard of living, or potentially much more if inflation averages higher, demonstrating how much its real value erodes over time, notes In2013Dollars and National Life https://www.in2013dollars.com/us/inflation/1996?amount=50000,.
Is a 20% raise for a promotion reasonable?
Yes, a 20% raise for a promotion is generally considered very good, often excellent, as it's significantly higher than typical annual raises (3-5%) and even above the average promotion increase (often 10-20%), reflecting substantial new responsibility or exceptional performance, though its value depends on your industry, location, and existing salary.
What are the top 3 causes of inflation?
The top three causes of inflation are Demand-Pull, where too much money chases too few goods; Cost-Push, from rising production costs like wages or raw materials; and Built-In Inflation, driven by expectations of future price increases, often through wage-price spirals, with monetary policy also being a major long-term factor. These forces combine to reduce purchasing power as prices for goods and services rise across the economy.
What is the real inflation rate right now?
Current U.S. Inflation Rate is 2.7%: Chart and Why It Matters. For the 12 months ending December 2025, the inflation rate was 2.7%.
Are salaries keeping up with inflation?
The Bureau of Labor Statistics has published average weekly wage data for nearly 20 years, since March 2006. Looking back, average wages outpaced inflation 72.4% of the time. Most recently, wage growth was faster than inflation in every month since February 2024.
Is a 3% raise really a raise?
A 3% raise is a typical, standard increase for cost-of-living or merit, but whether it feels like a "real" raise depends heavily on inflation rates, your company's pay structure, your performance, and your overall financial goals; while it keeps you roughly even with inflation, it might not feel substantial unless you're comparing it to a stagnant salary or factoring in long-term growth, as some feel it's barely keeping up, not a significant gain.
What is considered a good raise in 2025?
A good raise in 2025 typically falls in the 3.5% to 4% range, aligning with average company budgets, but top performers can see closer to 5-6%, while anything above 8% is considered a big raise, often requiring promotions or job changes, with higher figures possible in high-demand fields like tech or for specialized skills like CPA certification.
Is a 2% raise a good raise?
A 2% raise is often considered low, barely keeping pace with inflation and generally falling below the typical 3-5% average for cost-of-living or merit increases, though it can be normal in some company structures, especially if it's a standard annual adjustment without promotion, while 5% or more signifies a good raise, and 10-20% is excellent, often tied to promotions or exceptional performance.
How much is $30,000 in 1990 worth today?
$30,000 in 1990 has the same buying power as approximately $74,400 today (January 2026), due to an average annual inflation rate of around 2.55% over the last 36 years, meaning prices have more than doubled, with today's dollar buying about 40% of what it did in 1990.
How much should I raise to keep up with inflation?
To keep pace with inflation, your salary should ideally increase by the current inflation rate (around 2-4% or higher depending on the period) plus any merit for performance, typically aiming for a 3% to 5% raise for cost-of-living, but potentially higher (6-10%+) in high-demand fields or for significant performance, as standard increases often lag actual price increases. Check your region's Consumer Price Index (CPI) and industry salary data for a precise figure, as a 3% raise may not cover substantial inflation, requiring a larger request to maintain purchasing power.
What is a normal yearly raise?
Companies typically offer employees a 3-5% pay increase on average. Even if this range doesn't seem like a reasonable raise to you, keep in mind that consistent wage increases can add up over time, providing you with a higher income than what you received when you started at the company.
How much will $50,000 be worth in 30 years of inflation?
$50,000 today will have significantly less buying power in 30 years due to inflation; at a typical 3-4% average inflation rate, it could be worth the equivalent of $125,000 to $160,000 in future dollars just to maintain its current standard of living, or potentially much more if inflation averages higher, demonstrating how much its real value erodes over time, notes In2013Dollars and National Life https://www.in2013dollars.com/us/inflation/1996?amount=50000,.
How much is $100 in 1990 worth today?
$100 in 1990 is worth approximately $248 today (early 2026) due to inflation, meaning you'd need around $248 to buy what $100 bought back then, reflecting a roughly 148% price increase over 36 years, though this figure can vary slightly depending on the exact end date and calculation method.
Who is really responsible for inflation?
42% of inflation could be attributed to government spending. 17% could be attributed to inflation expectations — that is, the rate at which consumers expect prices to continue to increase. 14% could be blamed on high interest rates.
Why is inflation called the silent killer?
Inflation is called the "silent killer" because it quietly and gradually erodes the purchasing power of money over time, much like a stealthy threat, without dramatic crashes or noticeable immediate impacts, making its corrosive effect on savings and standard of living easy to overlook until it's too late. It works in the background, making your money buy less each year, slowly diminishing your wealth and making it harder to afford the same goods and services.
Who benefits from high inflation?
Who Benefits? Inflation makes it easier on debtors, who repay their loans with money that is less valuable than the money they borrowed. This encourages borrowing and lending, which again increases spending on all levels.
Is it better to get a bonus or raise?
One of the most notable differences between bonuses and raises is the duration of the compensation. Bonuses are one-time, short-term financial rewards. A raise is an increase to your current salary for the foreseeable future and provides more long-term benefits.
What is a dry promotion?
Also known as no-raise or quiet promotions, dry promotions are when an employee is offered increased job responsibilities, and often a new job title, but without a corresponding increase in compensation.
Do raises keep up with cost of living?
Pay 'Out of Sync' with Cost of Living
The new figures on financial strain are coupled with the fact that just 9% of workers indicated they received a raise or salary adjustment to offset higher costs, according to Monster. “The state of pay today is out of sync with the soaring cost of living,” Salemi said.