How Much is the Average Raise in America?

Have you recently received a pay raise or are you hoping to get one? If so, you might be wondering how your raise stacks up to the average. Most employees want to know whether their pay is fair—and what they can do to earn more.

There are many factors that impact an employee’s salary increase. Your occupation, the industry you work in, the type of raise you’re entitled to receive, and whether you are getting a promotion or changing jobs all can make a difference.

Determining How a Raise Measures Up to the Average

What’s the best way to tell if your pay raise is above or below average? Consider general factors that are related to the economy, your occupation, and the industry you work in:

• Overall growth in earnings and in the economy will impact the resources that organizations have available for raises.
• Industries that experience faster growth and are adding a high volume of workers will often offer higher raises to attract and retain the employees needed to support that growth.
• Occupations with a shortage of workers with the right skills and training are also more likely to offer higher than average salaries and salary increases.
• The industries with slow growth or job losses and wage stagnation are less likely to offer higher earnings, both in salary and pay increases.

Pay Raises by the Numbers

Companies seem to be responding to the pandemic's effect on the economy in different ways. According to PayScale's 2022 Compensation Best Practices Report, 44% of companies are planning to give pay increases higher than 3%—a 13% increase over the average of the last six years. However, 33% of organizations that cut or froze pay in 2020 did not make up for it and don’t plan on making up for it in the future.

92% of organizations are giving pay increases in 2022, up from 85% in 2021 and 67% in 2020. In spite of that, these raises may not be enough to compete with inflation.

According to the Bureau of Labor Statistics (BLS), inflation went up 9.1% between June 2021 and June 2022 and 8.5% between July 2021 and July 2022. However, wages only went up 5.3% between June 2021 and June 2022.

These figures include all types of raises and don’t imply that every worker had their pay increase by 5.3% in the private sector. Organizations with compensation systems tilted toward merit-based pay increases will show a greater variation in pay increases per employee.

Occupations with the Highest and Lowest Increases

Although wages and salaries grew 5.3% during the 12 months ending in June 2022, compensation does not increase equally across all occupations and industries. Some sectors have higher wage growth than others.

Here's what wage growth by sector looked like, according to the Federal Reserve Bank of Atlanta. It calculated wage growth using 12 month moving averages of the monthly median wage growth.

Types of Pay Raises

Consider the type of raise you expect to receive. Raises take several different forms:

• Across-the-board or cost-of-living raises are awarded at the same level to all employees. 
• Merit increases are distributed differentially based on performance.
• Promotion-based increases are allocated to employees who have advanced to new, more responsible jobs. 
• Equity raises are instituted by organizations to ensure equal pay for equal work.

Employer-Budgeted Increases: In November 2021, the Mercer Compensation Planning Survey found that employers were planning to budget 3.5% for total increases and 3.2% for merit increases. In March 2022, employers reported that they had actually delivered an average of 3.8% for total increases and 3.4% for merit increases. Although that pales in comparison to inflation, it is an increase from 2021, where the total increase delivered was 3.0% and the merit increase was 2.8%.

Performance-Based Pay Increases: The Willis Tower Watson Survey illustrates the impact that performance has on raises. In 2021, organizations reported that management and professional employees received average raises of:

• 2.6% for average performers
• 4.5% for top performers

This trend also applied to high-performing support staff and hourly staff.

Changing Jobs Boosts Your Pay

In August 2022, the median job switcher had much higher year-over-year wage growth than the median worker who stayed in their job, according to the ADP Research Institute.

• The median job switcher's wage growth was 16.1%
• The median job stayer's wage growth was 7.6%

The Best Ways to Position Yourself for an Above-Average Raise

What’s the best way to line up the best possible pay raise you can get?

It’s also important to be prepared to move on, because that can be your best opportunity to increase your earnings:

Identify How You Can Add Value

Identify the bottom line for your department and the area or areas where the most value can be added and appreciated by your supervisor and management.

Connect Your Goals to the Bottom Line

Work with your supervisor to develop a performance plan and tie your goals to the bottom line whenever possible. If your organization doesn’t have a structure for performance plans, volunteer to draft one for review by your supervisor.

Provide Updates on Your Progress

Communicate your weekly and monthly progress toward goals to your supervisor, whether requested or not. When it comes time to determine merit raises, your boss will have plenty of detailed information about your contributions.

Develop a Professional Development Plan

Develop and follow through on a professional development plan that incorporates cutting-edge knowledge and skills in your area. You will be prepared to make a stronger contribution to your current employer and change jobs if necessary. Pay special attention to upgrading your technology skills.

Works Towards a Promotion

Identify next-level positions at your organization and volunteer to take on any related tasks. Promotions are one of the best ways to get a large salary increase from your current employer.

Build Your Network

Keep your professional network current and take on roles in your field, such as leadership in professional organizations and conference presentations that will enhance your visibility and attract recruiters.

Enhance Your Marketability

Take the time to enhance your marketability to prospective employers while you’re still at your current job.

Be Prepared to Move On

Keep a constant eye out for openings in your field since job switching is the most common way to generate a big increase in income:

• An easy way to do that is to set up job search alerts. In addition to getting new listings as soon as they are posted, if the employer lists a salary, you can see what you could be earning if you made a change.
• Check salary surveys and calculators to estimate what someone with your credentials can expect to be paid.

Frequently Asked Questions