Caitlyn Moorhead

Mon, May 26, 2025, 3:01 PM4 min read

If you’re seeking a pay raise this year to help balance out prolonged inflationary pressure, rising cost of living or even tariff-induced sky-high grocery bills, there is some good news. Everything seems up in the air under the new White House administration and its Department of Government Efficiency (DOGE), meaning employers are desperate to find and keep good workers, which gives you more bargaining power.

Find Out: Here’s How To Use AI To Quickly Start a Side Gig, According to Codie Sanchez

Read Next: 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses

The tricky part is figuring out how much to ask for. The U.S. inflation rate is estimated to be about 2.4% (Core inflation, which excludes volatile food and energy prices, is closer to 2.8%) per the latest CPI data. The obvious solution is to ask for a pay raise of say 3% or so to at least cover inflation. So, if your current salary is $60,000, a 3% raise would be $1,800.

Though this seems pretty straightforward, that’s not always the best strategy, according to many experts.

Your first order of business should be to research pay rates not only for your specific industry and job, but also average pay raises across all industries. Traditionally, employers base raises on job performance rather than cost-of-living considerations. Cost of Living Adjustment (COLA) raises are often considered an expected annual boost to your paycheck, but that is not always the norm anymore.

Companies today may even disguise what should be considered a COLA bump as a ‘merit raise’ or annual performance-based increase, offering anywhere from 0% for an average or underperforming employee to 3% for the top earners. However, annual raises in the United States typically range between 3% to 5% in general anyway.

So, if you are lucky enough to get an automatic pay pump each year, it won’t necessarily add any money to your bank account, as it will just help you keep pace with inflation. To ensure that your raise results in real wage growth, you might consider asking for a bump in pay that outpaces inflation, such as a minimum of 10% for standard work performance.

Normally, asking for that high a raise is risky. But these aren’t normal times, as several economic factors are relevant for thinking about salary negotiations right now, such as a pending recession, skyrocketing cost of living and a dramatic increase in food costs.

Learn More: 15 Things You Can Donate for Money

When it comes to the statistics of getting paid more for loyalty or finding a new position, many experts are on the fence. Though many would advise that it is easier to find a new job when you still have one, it still could be better for you to quit.