Even though unemployment sits near historic lows, many workers have not seen any benefit from the strong job market. In fact, more than half of all American workers (52 percent) did not get a raise over the past 12 months, according to a new survey from Bankrate.
And the numbers are actually worse than they look because in reality, only 38 percent of workers saw their pay increase at their current job. Another 18 percent, which includes eight percent of those surveyed who also got a raise from their previous employer, saw their wages go up when they got a new job.
For older workers, the numbers are even worse. Nearly two-thirds of those aged 53 and up did not get a raise at their current job or get a new job that pays better over the past 12 months. That compares to a 47 percent rate among workers younger than 53.
What’s Happening in the Market?
Employers are being cautious, and so are employees. Even though the unemployment rate has been low and the number of available jobs hit six million in August according to the Bureau of Labor Statistics (BLS), workers are reluctant to move on from their current position.
That job openings number is only slightly down from July, which set a record for the data tracked by the BLS since 2000. But, despite all the demand, the “quits” rate, which measures the percentage of people who voluntarily left their jobs in a month, was only 2.1 percent in August. That’s virtually unchanged over the past two years, according to data analysis done by Jon Talton at the Seattle Times.
If employees won’t quit their jobs when they don’t get raises (or at least be willing to), it removes the incentive for companies to pay workers more. But workers may not hold the lack of a raise against their company for the same reason they aren’t willing to leave their job, despite the market being healthy — they’re nervous about the economy’s ongoing prospects.
Those concerns may not be valid, but the Great Recession happened recently enough (December 2007 through January 2009, though those dates are debatable) that people remember it. That may have left a lingering hangover that keeps some people — in fact, quite a lot of them — from pushing for a raise and being willing to leave when they don’t get one.
How Were Raises Given Out?
Among the American workers who did get a pay raise from their current employer, a growing number got one by getting a promotion and new responsibilities. That number grew to 24 percent of those getting raises, up from 10 percent last year.
About a quarter of raises (27 percent) came through cost-of-living increases, while performance-based raises were the top reason (52 percent) workers saw their pay rise. Another eight percent cited a different reason, and four percent did not know why their pay was increased, according to Bankrate, which noted the likelihood of getting a raise from your current employer rises steadily with income and education level.
“While the economy continues to improve, it’s disappointing that Americans’ wages have not,” said Bankrate.com Chief Financial Analyst Greg McBride. “Though younger workers are experiencing career advancement, older Americans are hampered by stagnant incomes. This makes it even more vital to start saving early, since significant wage gains become less frequent as you get older.”
Don’t Expect a Raise
There are a number of fields where wages have risen, but that has not emboldened workers in less in-demand jobs to push for more money. What’s clear is that in many cases companies are not offering raises and employees are not asking for them.
If you want a raise, it makes sense to test your marketability. If you get another offer for more money, you can either take it or use it as leverage. Some employers may not respond well to that, but others will fight to retain valuable employees.
Take the lead in your own employment situation. Ask for a raise, and if the request is denied, ask for parameters to earn one over a reasonable period of time (three to six months). If your employer won’t negotiate, it may be time to test the job market.
This article was originally published on The Motley Fool. It is reprinted with permission.