How Much is a Dollar Raise Annually?
If you are paid for 40-hours per week, and 52-weeks per year, a $1 an hour raise will add up to $2,080 extra per year. The following dollar raise calculator will calculate the annual effect of other pay increase scenarios.
How to Calculate Pay Raise
To calculate your pay raise based on a percentage increase, convert the percentage to a decimal number (move the decimal point 2 places to the left) and multiply your current pay or salary by the decimal number.
|Example % to $ Calculation|
|Raise =||$1,000 x 0.02 (2% / 100)|
How to Figure Out Pay Increase Percentage
To calculate your pay raise percentage based on a dollar amount increase, subtract your current pay or salary from your new pay or salary, divide the result by your current pay and convert that result to a percentage (move decimal point 2 places to the right).
|Example $ to % Calculation|
|Increase =||($1,020 - $1,000) / $1,000|
|Increase =||$20 / $1,000|
|Increase =||2% (0.02 x 100)|
If you want to estimate your raise after taxes, calculate your Net Paycheck with and without the dollar amount increase.
How Much of a Raise to Ask For?
That depends on your value to your employer and on how well the company is doing.
If you're not contributing to your employer's bottom line, and your employer is struggling to make ends meet, asking for any size raise might not make sense.
On the other hand, if you know your work is generating profits for your employer, and your employer's bottom line is growing, it wouldn't be unreasonable to ask for a 10% to 20% increase over what you are currently earning.
But in either case, if you don't get an annual raise equal to the inflation rate (see Salary Inflation Calculator), your buying power will decrease even if the size of your paycheck stays the same.
Who Ultimately Determines Your Earnings?
Who is ultimately responsible for how much you earn from the time you spend serving an employer? If you're not sure, here's a clue. It's NOT your employer.
Your Employer's Perspective
First of all, having been an employer myself, I can tell you that your employer would love nothing better than to pay you what your time, talents and skills are worth to the company. After all, your employer is competing for employees just as much as you are competing with everyone who desires your job. If the employer is not paying you what you believe you are worth, there are only three possible explanations.
- The company is not able to effectively compete in their marketplace (they might be in desperate need of better employees).
- Your value to the company is less than you perceive it to be.
- A combination of reasons #1 and #2.
Profitable Employers Are Not Stupid
Contrary to what you might think, your employer is not continuously scheming for ways to make you work harder for less money. If your employer is profitable, they are certainly smart enough to realize that if they don't compensate their best employees with competitive wages, they will lose their best employees. They are also smart enough to realize that if they lose all of their best employees, they will likely no longer be profitable.
So the first part of the "increase your pay" formula is to make sure you are and continue to be, one of your employer's best employees. This will ensure that you are paid as much as the employer can afford to pay you based on their earnings. And if you want to help your employer increase their earnings, encourage your co-workers to become "best" employees as well.
Golden vs. Rotten Eggs
What many employees fail to realize is that their employer is the goose that lays golden eggs. How so? Because each dollar you receive from your employer comes with built-in earning potential. If you invest a portion of each dollar you earn, you will continue to earn income from each hour's work ... for the rest of your life. Viola, Golden Eggs!
However, if you fail to invest any portion of the dollars your employer is paying you, and instead spend them all on non-appreciating purchases, you have effectively turned the potential Golden Eggs into Rotten Eggs.
So the second part of the "increase your pay" formula depends on what you do with what your employer is paying you.
Asking for a Pay Raise
What's the most effective way to go about asking for a pay raise? Find a full-length mirror, position yourself squarely in front of it, and then ask the person in front of you if they could please become worthy of a pay raise and stop turning all of your Golden Eggs into Rotten Eggs.