In these tricky economic times, asking for a raise may seem even more daunting than it would have even a year ago. 

How is inflation influencing these conversations between employer and employee? It’s often conventional wisdom for workers to focus on their performance (merit) when discussing a raise; but many Americans are finding themselves cash-strapped in this economy. Concerns that wages aren’t keeping up with rising prices may be something to consider when talking to your boss.

With the cost-of-living crisis impacting millions of earners, should companies take an interest in how inflation may be impacting employees during these uncertain times? Should employees view higher prices as part of their calculus?

Ravit Heskiau-Ludwig, associate teaching professor of management and organizational development at the D’Amore-McKim School of Business, says there’s no one-size-fits-all approach to these questions. 

“There are multiple and different considerations and circumstances that could guide an employee’s conversation with their manager or employer about salaries and other benefits,” she says. “Like in any relationship, there are different perspectives, in this case the perspective of the employee and that of the employer.” 

In addition to workers, companies have also felt the impact of rising prices, Heskiau-Ludwig says. It is, in some ways, part of the inflationary cycle: businesses raising prices on their customers as a means of coping with supply chain costs. 

“Naturally, the level of raise requested and granted also depends on the financial situation of the organization and whether it is likely that the organization can currently afford certain raises,” Heskiau-Ludwig says. “Employers are also consumers and are affected by inflation.”

Heskiau-Ludwig says there may be other ways for employers and employees to offset costs while finding common ground. As a result of the COVID-19 pandemic, workers have placed more importance on work-life balance, overall well-being and the meaningfulness of work. 

Increased flexibility in terms of remote work, or number of hours worked, may be more attractive to employees and lead to greater savings, she says. Employers can also offer more opportunities for growth, learning or acquiring new and up-to-date skills as a way of keeping their help happy.  

“Employees and employers should reflect on whether there is something more beneficial in the short or long term that can create a ‘win-win’ and satisfy both the employee and the employer,” Heskiau-Ludwig says. 

At the same time, employers should be mindful that inflation really has set many families back.

“On the other hand, for some employees, the rising cost of living is a central concern, and a higher pay is a stronger need,” Heskiau-Ludwig says. 

As the economy heads into a potential recession, companies are most likely getting ready to tighten their belts, which could lead to more layoffs that, in turn, may cause a shift in the worker-boss relationship. That shift may mean workers in some sectors will have less leverage than they did during the pandemic, which might make the business of hiring and firing more transactional than it was in recent months. 

Not all of a company’s employees are on a level playing field in terms of their commitment to the organization and the time in which they plan on staying there, Heskiau-Ludwig says. Company culture and values also differ by organization. Additionally, she says, there could be norms or unwritten rules that shape conversations about salaries, among other things, that employees should consider if they’re thinking about asking for a raise. 

At the end of the day, Heskiau-Ludwig says, organizations and their workers should keep the lines of communication open. 

“Showing empathy and flexibility, by both sides, is a way to invest in this relationship— a relationship that can continue far beyond employment in the specific organization,” Heskiau-Ludwig says.

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