Annual salary increases in 2021 are more vital than ever after a year of volatile economy and job market changes. A new The Simple Dollar survey found that 70% of employed U.S. adults say a pay increase would be important for their household’s financial wellbeing. Despite this, about 40% of respondents are not expecting a pay increase this year.
We’ll break down everything we learned about pay increase expectations and how people would spend the additional income.
Key Takeaways:
- Over 4 in 10 of all employed U.S. adults are not expecting a pay increase in 2021
- 70% of employed U.S. adults say a pay increase is important for their households’ financial wellbeing in 2021
- Of those not expecting a pay increase, 62% say it would be important for their financial wellbeing
- 76% of those not expecting a pay increase this year but considering it important to get one, claim they need it to cover everyday expenses
- 59% cited a pay increase necessary for emergency savings
- 45% cited needing a pay increase to pay mortgage or rent
41% of employed US adults are not expecting a pay increase in 2021
Under half of working adults in the U.S. are not expecting to receive an increase in pay this year. That could be due to the nature of their industry or job type, or be a result of the tumultuous year many businesses have experienced. Respondents who make less per year are less confident in a pay raise — 56% of those making $ 80,000+ are expecting a pay increase this year compared to only 36% of those making under $ 40,000.
Younger workers are also more likely to expect a pay raise. Younger millennials (50%) and older millennials (53%) are expecting a pay increase compared to 39% of Gen X and 40% of younger boomers.
More men than women are expecting a pay raise in 2021
Our survey found that 10% fewer women (39%) expect a pay increase in 2021 than men (49%). Despite the same percentage (70% of men and 70% of women) that say getting a raise is important to their household’s financial wellbeing. Both male and female survey respondents indicated equal importance of a pay raise increase this year to their financial wellbeing.
More Black adults are expecting a raise than white respondents
Our survey found 52% of Black respondents are expecting a raise (20% of which expect it to be more than past years), while 41% of white respondents said they are expecting a raise (only 9% expect it to be more than previous years). Yet, 52% of white respondents said they typically receive a raise year over year, compared to 42% of Black respondents.
70% say a pay raise is important for financial wellbeing
A majority of working U.S. adults feel receiving a pay raise would be important for their household’s financial wellbeing in 2021. While an equal number of men and women indicated it would be important for their financial wellbeing, there was a discrepancy when it came to racial demographics. 88% of Black respondents said a pay increase is important to household income vs. 65% of white respondents.
Takeaway: For those expecting a pay raise, 78% said it would be important for their financial wellbeing compared to 62% of those not expecting a pay raise.
62% of those not expecting a pay raise say it would be important to their financial wellbeing
Of those that indicated they weren’t expecting a pay raise, 62% said it would be important to their financial wellbeing.
It’s a challenging year to know you may not be receiving more compensation. If you aren’t expecting a pay raise but need more income to support your financial wellbeing we recommend picking up gig work, creating passive income streams, taking online classes for in-demand skills and adjusting your lifestyle to live below your means. Not everyone has the access or luxury to make these kinds of changes, and can turn to local nonprofit or small government programs offering financial assistance right now.
Most would dedicate a pay raise to everyday expenses and savings
For the 62% of those that say a pay raise would be at least somewhat important to their financial wellbeing (but are not expecting one) — more than three-fourths (76%) claim they need one this year to cover the cost of everyday expenses. Another 59% say a pay increase is important for saving for emergencies, and 46% need it to pay their mortgage or rent.
Among respondents who make more than $ 80,000 per year, contributing to retirement savings (54%) and saving for emergencies (54%) were the top cited reasons. While covering the cost of everyday expenses is the commonly most cited reason for those making under $ 40,000 (66%) and between $ 40,000- $ 80,000 (64%).
Tips for scoring a raise in 2021
If your annual raise isn’t a guarantee, you may want to consider having a conversation with your manager. Advocating for your pay increase can go a long way in getting you that raise and impressing your manager by showing initiative, confidence and drive. Be familiar with your company’s success this past year and aware of any significant impacts the pandemic may have had on the business — this information could influence whether you get a raise and how much it’ll be.
- Gather your evidence. Prepare examples and detailed evidence of how you’ve contributed to the company’s success and how your skills have grown. Make it easy for your manager to say yes by having an indisputable list of how you provide value that’s worth more compensation.
- Scope out the market. Research the cost of living in your area and how it has increased since you last saw a pay raise. Also, look up the market value of your particular skill or job and compare that to your salary.
- Be real. If you’ve had a particularly rough year financially and need an increase in income for your financial wellbeing, it’s okay to be honest about that with your manager. If you have a good relationship with your company, they should care about your financial stability. Financial security in your personal life also means more room and energy to focus on doing a good job.
- If you hear no, get creative. If a raise isn’t on the table, consider asking for different perks like more paid vacation days or a transportation allowance. If you’ve been asked to work from home this year, request a fund for setting up your home office or reimbursing a set up you’ve already invested in this year. And make sure to request a timeline for when you can discuss a raise again — like in six months.
Methodology
All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2605 adults (of whom 1056 qualified as “employed adults”). Fieldwork was undertaken between 11th – 14th December 2020. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).
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