Cost of living raise?

September 12, 2005 10:28 AM

AnnualReviewFilter: It's that time of year again. Is there a rule of thumb or minimum, percentage-wise, to expect to keep up with inflation and cost-of-living for this year compared to last?

In other words, if you get an annual raise, should you hope to get a "minimum" percentage increase in order to break even given rising costs?

Any info I could find online was in regards to moving from one city to another -- I'm just staying in the same one. San Francisco, if it makes a difference.

posted by robbie01 to Work & Money (8 answers total)

The Consumer Price Index is probably what you're looking for. The change from July 2004 to July 2005 is 3.2% (taken from this table). But, given gas prices in recent weeks and the fact that that CPI is an average "for All Urban Consumers", you might want to hope for a bit more.
posted by Plutor at 10:57 AM on September 12, 2005

This table has some major urban areas. For the LA area for July 2004 to July 2005, the increase was 4.1%. On page 13 of last month's PDF, they have San Francisco, which says from June 2004 to June 2005, the CPI increased a paltry 1.1%.
posted by Plutor at 11:06 AM on September 12, 2005

Screw the consumer price index. It exempts real property, food and gasoline.

I live in Orange County, in southern California. Property values went up 20% last year and gasoline doubled.

So I'd say, 10% if you're in a big city (or in California), 5% if you're not. If you're in the chilly regions, fuel oil is more expensive, too, so tack on another 2%.
posted by curtm at 12:16 PM on September 12, 2005

Actually, the CPI includes housing (rent or owner's equivalent), transportation (gasoline and insurance) and food. The weights they give to different expenses might not be the same as everyone's (they include college tuition and pet expenses, which aren't quite universal), but it's a better starting point than winging it.

And gas prices did not double in the last year. In SanFran, they've gone from about $2.20 to $3.00. (You'll have to click on "1 year")
posted by Plutor at 3:26 PM on September 12, 2005

3.2% is the average annual Cost-of-Living or "good" performance raise being given at Fortune 500 companies this year. I know that's not what you want to hear but that's what the Society for Human Resource Management annual survey says. That's actually high, usually it's closer to 2.9%.
posted by pomegranate at 7:02 PM on September 12, 2005

Actually, the CPI includes housing (rent or owner's equivalent), transportation (gasoline and insurance) and food.

My bad. I was actually thinking about the "core inflation rate" cited by economists and the administration. There's a good discussion of that here.
posted by curtm at 7:03 AM on September 13, 2005

Just an anecdote: When I worked at Microsoft, it was lower- if you were a "great" performer you might get 1.5-2%, or if you were really lucky a whopping 3%, as I recall. I suspect most tech companies- that is to say, non-unionized work forces- give the same to their employees: a big fat "Ha! No soup for you!" And like most tech companies, Microsoft invented fake "rules" discouraging compensation discussions among employees. Silly tech geeks... =)

Granted, Microsoft also had a bonus with the annual reviews, although it seems to get pared down every year. While a small percentage of people, myself included, would see bonuses up to the maximum 15%, most people seemed to get around 5%, maybe, on average.

I guess that was more a "Cost of Living Adjustment" than a bonus at that point.
posted by hincandenza at 2:53 PM on September 13, 2005

At my office, the range is 0 % to 4 %, depending on performance evaluation. There's huge disparity in pay between different people doing the same jobs, and my boss said some people's raises may be a bit smaller / bigger to bring them more in line with where they should be.
posted by croutonsupafreak at 3:38 PM on October 5, 2005