I recently interviewed Andrew M. Challenger, vice president of the outplacement company Challenger, Gray & Christmas in Chicago, to discuss unemployment, wages and benefits.
Q: The unemployment rate is the lowest in nearly five decades, but wages have stagnated. Why?
A: We’ve seen some very small upward movements in wages, but it seems as if companies have yet to hit the point at which they really struggle to attract and retain good people. One reason: The availability of jobs has attracted workers from the sidelines who left or retired from the workforce during the Great Recession or who have worked gig jobs, such as driving for Uber, to get by. Meanwhile, more of workers’ total compensation goes to benefits, much of it to health care, which doesn’t materially change the lives of employees for the better. It’s an indictment of the health care system, which may be keeping wages artificially low.
Q: What’s the outlook for pay?
A: With the caveat that we’ve said this for two years, everything leads us to believe that wages will begin rising by year end and more quickly than they have over the past eight years. Amazon’s minimum wage increase to $15 an hour is a bold move that will escalate the fourth-quarter war for new talent.
Q: What strategies can I use to get a raise?
A: Most raises now go to people who switch companies. Having an offer is a great negotiating tool, because you can show that someone else is willing to pay you more. Use websites such as Glassdoor.com or Salary.com, where people at various companies share salaries for their positions. With that information, you can go to your boss and say, “The market is paying 5 percent more than you’re paying me now.” A longer-term strategy is to ask your boss to provide milestones or specific achievements you need to meet or surpass to be considered for a promotion or raise. When it's time for your next review, you can say, “I hit these goals, and I really do deserve a raise now.”
Q: If I can’t get a pay increase, can I negotiate benefits?
A: Absolutely. Base salary is highly controlled in most companies, but managers have much more autonomy over such benefits as added vacation days, flexible work days and telework.
Q: Do ultimatums work?
A: If you draw a line in the sand and say, “If I don't get what I want, I'll leave,” you must be 100 percent willing to go. Otherwise, you could end up stuck.
Patricia Mertz Esswein is an associate editor at Kiplinger's Personal Finance magazine. Send your questions and comments to firstname.lastname@example.org.