Americans say raises are key to finances, survey finds. Here’s how to get one.
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Government policies, less debt and cost of living all take a backseat to a bigger paycheck when it comes to enhancing Americans’ overall financial picture.
According to Bankrate’s Financial Outlook Survey, 52 percent of people say that making more money at work will improve their financial situation. The runner-up was having less debt, which garnered 38 percent of the votes.
Note: Among respondents who expect their finances to improve compared with 2018. Respondents could select more than one response. 1% refused to answer.
Source: Bankrate Financial Outlook Survey, Dec. 14-16, 2018
|More money at work||52%|
|Having less debt||38%|
|Some other reason||18%|
|More money from savings/investments||17%|
|Work done by political leaders in D.C.||10%|
American workers are not asking for too much, says Ryan Nunn, a fellow in economics studies at the Brookings Institution. For decades wage growth has been stagnant.
Even with low unemployment numbers, wages haven’t reflected that growth in the jobs market. And, as the effects of the Great Recession still linger, nominal wages need to be higher for the country to fully recover. Nominal wages grew at 3.2 percent year over year in 2018, just missing the mark for the target growth that’s needed, which is around 3.5 to 4 percent, according to the Economic Policy Institute, or EPI.
“People have expected faster wage growth, especially recently, as the unemployment rate has fallen so much. But that hasn’t happened. Many of us had hoped for a quicker pick-up in wages,” Nunn says.
There’s no silver-bullet solution for fixing the problem, but Nunn points to two areas that significantly contribute to the slow-moving earnings increase: low worker bargaining power and non-competitive labor markets.
Workers lack leverage
He explains that things like the decline of labor unions in the private sector as well as restrictive contracts such as non-compete agreements can hinder workers’ abilities to ask for higher wages or even leave a job to make more money elsewhere.
These agreements, he points out, are not limited to executive-level jobs. Low-skilled workers are also asked to sign these agreements, Nunn says, citing Jimmy Johns as one such example.
“Jimmy Johns was using it for many of their workers in their restaurants, and that’s just one of many examples where this practice has taken place. It’s important because it directly limits the competitiveness in the labor market. It prevents workers from switching jobs where they can make more money,” Nunn says.
Additionally, if there were more private-sector unions, then workers might have more help understanding and negotiating labor contracts more effectively.
Wage transparency can also help workers negotiate pay, says Nunn. On the federal level, a policy that would help give workers more information on the average salary for their job would help even the playing field between them and employers.
“Often employers are in a better position to know what typical compensation is than what the workers do,” Nunn says. “So when you have that asymmetry in information, workers have less bargaining power. They’re less likely to get the best wage possible.”
Highest earners, college grads said fatter paychecks would improve bottom line
Ironically, people who earned more than $75,000 annually were more likely, 57 percent, to cite a pay increase as the reason for a better financial situation in 2019 than their peers who earned less than $30,000 — only 40 percent cited this.
College graduates were also more likely to cite bigger paychecks, 65 percent, than those with a high school education or less, 43 percent.
Most people, regardless of age, chose more income as the number one way to get to a better financial position. For seniors, aged 65 and older, having less debt took first place, followed by what the government is doing.
How to make more money at work
If increasing your earnings is on your to-do list for 2019, then you should quit your job, advises Penelope Trunk, co-founder of Quistic, which provides online career management courses.
“Here’s the secret at getting more money: change jobs. You don’t get more money at a current job unless you have somebody that thinks you’re an absolute rockstar and they’re a rockstar and you’re both moving up the ladder at breakneck pace. So if you don’t have that, and almost nobody does, then you have to change jobs in order to significantly change the amount of money you’re making,” Trunk says.
The reason for this is that managers have a certain budget for each position, so getting more than a 10 to 15 percent pay bump is unlikely. Even doing more work than you signed up for doesn’t guarantee a raise or a promotion, according to Trunk.
Before putting in your two-weeks notice there are a couple things you should do. First, figure out what the next rung on your career ladder is. For example, a social media manager might apply for a marketing director job while a human resources director might look for vice president of HR roles.
The next thing you should do is hire a professional resume writer, Trunk emphasizes, stating it changed her life when she realized how much better her resume was when a pro wrote it. She says that people often don’t see their own mistakes — whereas the same gaffes are crystal clear to strangers.
The hallmark of an effective resume, Trunk points out, is that it makes you look like you’re already doing the job above yours. She advise job hunters to eliminate everything on their resumes that don’t pertain to the job they want.
As far as choosing a good resume writer, Trunk says there’s one main question you must ask: “Can you write my resume so that it looks like I’m a rank above where I am?”
A helpful offshoot of having a resume professionally written is that it serves as a sort of Cliff’s Notes for your interview.
Your new resume will include the highlight reel of your current job — such as a time when you helmed a big project or created a killer presentation. By highlighting these moments on paper, you’re also preparing your brain for interview questions.
“It blows my mind that people don’t hire someone — it would shock them at how much easier job hunting is with a well-written resume,” Trunk says.