Raise vs Inflation Calculator
Example: Current salary: 60000 $ · Raise offered: 3 % · Inflation rate: 4 %
| Real raise after inflation | -0.96% |
| Real value of new salary | $59,423 |
| Real dollar change | $-577 |
Worked example
A 3% raise on a $60,000 salary lifts you to $61,800 in nominal dollars. But if inflation is 4%, dividing $61,800 by 1.04 gives a real value of about $59,423 in today's dollars — actually $577 less than you started with. The real raise is roughly negative 1%. Despite the bigger number on your paycheck, your money buys less than before, which is exactly the kind of stealth pay cut this tool exposes.
Frequently asked questions
What inflation rate should I use?
Use the most recent annual Consumer Price Index change from the Bureau of Labor Statistics as a starting point, or your own experienced inflation if your spending is heavy in categories like rent or food that may be rising faster. The published headline number is the standard benchmark for judging a raise.
What counts as a good real raise?
Any positive real raise means your purchasing power grew. Historically, real wage growth of 1 to 2% a year is considered healthy. If your real raise here is negative, you are falling behind and have a strong, data-backed case to negotiate for more or to look elsewhere.
Why divide by inflation instead of just subtracting it?
Subtracting the inflation rate from the raise rate is a quick approximation that works at low numbers, but dividing the new salary by one plus inflation is the mathematically correct way to express future dollars in today's purchasing power. At higher inflation, the difference between the two methods becomes meaningful.
How do I use this in a salary negotiation?
Calculate the raise percentage you would need just to match inflation — roughly equal to the inflation rate — and frame anything below that as a real pay cut when you negotiate. Coming in with the specific real-terms shortfall is far more persuasive than a general request for more money.