What Is the Average Yearly Raise?

Note: This article is written for general career and compensation education. Salary decisions vary by employer, role, location, performance, budget, and market demand.

Ask five people what a “good raise” is, and you may get five wildly different answers. One person is thrilled with 3%. Another thinks anything below 8% deserves a dramatic chair spin and a fresh LinkedIn profile. The truth sits somewhere in the middle: the average yearly raise in the United States usually falls around 3% to 4% for many employees, with recent employer salary budgets hovering near the mid-3% range.

That number sounds simple, but raises are not as tidy as a calculator would like them to be. Your annual raise depends on your industry, job level, performance, company budget, inflation, location, and whether you are getting a standard merit increase, a promotion raise, or a market adjustment. In other words, the “average yearly raise” is a useful starting point, not a magic number engraved on the office coffee machine.

In this guide, we will break down what the average yearly raise means, how much employees commonly receive, what affects your raise, how inflation changes the picture, and how to know whether your increase is fair.

What Is the Average Yearly Raise in the U.S.?

The average yearly raise for U.S. employees is typically around 3% to 4%. Recent compensation planning surveys from major HR and pay-consulting organizations have generally placed planned salary increase budgets near 3.4% to 3.6%, with merit increases often closer to 3.1% to 3.2%.

That means if you earn $60,000 per year, a 3.5% raise would add about $2,100 annually, bringing your salary to $62,100. On a monthly basis, that is roughly $175 before taxes. It is not yacht money, unless your yacht is inflatable and currently on clearance, but it does matter over time.

Here is a simple example:

• Current salary: $70,000
• 3% raise: $2,100 increase
• New salary: $72,100
• 4% raise: $2,800 increase
• New salary: $72,800
• 5% raise: $3,500 increase
• New salary: $73,500

For many workers, a raise between 3% and 4% is considered normal. A raise below 3% may feel disappointing if inflation is high or your responsibilities have grown. A raise above 5% is often considered strong, especially if it is not tied to a promotion.

Average Raise vs. Merit Raise vs. Cost-of-Living Raise

One reason people get confused about raises is that employers use several different terms. They sound similar, but they do not always mean the same thing.

Average Yearly Raise

An average yearly raise refers to the typical salary increase employees receive over a year. It may include merit raises, cost-of-living adjustments, promotional increases, and market adjustments, depending on how the employer reports it.

Merit Raise

A merit raise is based on performance. If you exceeded goals, improved processes, increased revenue, trained new team members, or rescued a project from becoming a corporate campfire, your employer may reward you with a merit increase.

Merit raises are commonly around 3% for employees who meet expectations, with higher percentages for top performers. However, even excellent performance does not guarantee a giant raise if the company has a limited salary budget.

Cost-of-Living Adjustment

A cost-of-living adjustment, often called a COLA, is designed to help pay keep up with rising prices. It is usually tied to inflation, although private employers are not required to match inflation exactly. If inflation rises faster than your raise, your paycheck may grow while your purchasing power shrinks. That is the financial equivalent of running on a treadmill while someone slowly turns up the speed.

Promotion Raise

A promotion raise is usually larger than a standard annual raise because it comes with a higher title, more responsibility, or a bigger scope of work. Promotion increases often range from about 6% to 10% or more, depending on the company, job level, and market rate for the new role.

Market Adjustment

A market adjustment happens when an employer raises pay to match current market conditions. This may occur when a role becomes harder to fill, competitors pay more, or salary data shows current employees are underpaid compared with similar workers elsewhere.

Is a 3% Raise Good?

A 3% raise can be good, average, or weak depending on the situation. If inflation is low, your responsibilities stayed mostly the same, and your company is managing costs carefully, 3% may be a perfectly reasonable annual increase. But if inflation is running above 3%, your real buying power may not improve much.

For example, suppose you receive a 3% raise, but prices rise by 3.5%. Your salary is higher on paper, yet your money buys slightly less than before. This is why employees should look at both the raise percentage and inflation. The number on your paycheck matters, but so does what that paycheck can actually buy.

A 3% raise may also feel low if you took on extra duties, managed a major project, trained coworkers, improved sales, or filled in for a role the company never officially replaced. In those cases, it may be worth preparing a data-backed case for a higher increase.

What Is Considered a Good Yearly Raise?

In general, here is a practical way to think about yearly raises:

• 1% to 2%: Low raise, often below expectations unless the company is struggling.
• 3% to 4%: Average raise for many U.S. workers.
• 5% to 7%: Strong raise, often linked to high performance or expanded responsibilities.
• 8% to 10%: Excellent raise, commonly tied to a promotion, market adjustment, or retention effort.
• 10% or more: Major raise, often connected to a new job, major promotion, scarce skill set, or correction of underpayment.

However, these ranges are only guidelines. A 5% raise in one industry may be outstanding, while in another it may simply be competitive. Technology, healthcare, finance, construction, skilled trades, and specialized professional roles may see different pay patterns than retail, hospitality, education, or administrative support.

How Inflation Affects Your Raise

Inflation is one of the biggest reasons annual raises feel different from year to year. If prices rise quickly, even a normal raise may feel underwhelming. Groceries, rent, insurance, gas, childcare, and healthcare do not politely wait for your performance review before getting more expensive.

For example, if you earn $80,000 and receive a 3.5% raise, your salary increases by $2,800. But if your rent, food, insurance, and transportation costs rise by more than that, you may feel financially squeezed even though your employer technically gave you a raise.

This is why workers often ask, “Should my raise match inflation?” Ideally, pay growth should help employees maintain or improve purchasing power. In reality, many employers set salary budgets based on a mix of inflation, labor market competition, company performance, revenue expectations, and internal pay equity. Inflation matters, but it is not the only factor companies use.

Why Some Employees Get Bigger Raises Than Others

Two employees can work at the same company and receive very different raises. That may feel mysterious, but employers usually consider several factors.

Performance

Employees who clearly exceed goals may receive larger merit increases than those who meet expectations. The key word is “clearly.” If your achievements are invisible, your raise may be too. Managers are not mind readers, even if they sometimes schedule meetings as if they can see your calendar pain.

Salary Range Position

If you are already near the top of your salary range, your raise may be smaller. If you are lower in the range and performing well, your employer may have more room to increase your pay.

Company Budget

Even strong performers can receive modest raises when company budgets are tight. Salary increases are often planned months in advance, and managers may have limited flexibility once budgets are approved.

Industry Demand

Jobs requiring scarce or high-demand skills often receive larger raises. Roles involving AI, cybersecurity, healthcare, engineering, data analytics, finance, and skilled technical work may command stronger pay growth when talent is hard to find.

Location

Pay can vary dramatically by region. A salary that is competitive in a small Midwestern city may not stretch nearly as far in San Francisco, New York, Boston, Seattle, or Washington, D.C. Remote work has changed some salary conversations, but geography still matters.

Average Raise by Job Change: Staying vs. Switching

Employees who change jobs often receive larger pay increases than employees who stay with the same employer. Recent payroll and wage-growth data has shown that job changers frequently outpace job stayers, although the gap changes with labor market conditions.

Why does switching jobs often pay more? New employers may need to offer competitive salaries to attract talent. Current employers, meanwhile, often work within annual raise budgets that limit increases for existing staff. This can create what some workers call a “loyalty penalty,” where staying put leads to slower pay growth over time.

That does not mean everyone should jump jobs every time a recruiter sends a message with too many exclamation points. Job switching can bring risk: a new boss, new culture, new commute, new expectations, and the possibility that the “fast-paced environment” in the job posting means “bring snacks, you live here now.” Still, if your pay has fallen behind market value, exploring outside offers can help you understand your worth.

How to Calculate Your Raise Percentage

Calculating your raise percentage is simple:

Raise percentage = (Raise amount ÷ Current salary) × 100

For example, if your salary increases from $65,000 to $67,600, the raise amount is $2,600.

$2,600 ÷ $65,000 × 100 = 4%

You can also reverse the math to estimate your new salary:

New salary = Current salary × (1 + Raise percentage)

If you earn $90,000 and receive a 3.5% raise:

$90,000 × 1.035 = $93,150

This calculation helps you compare offers, understand annual increases, and prepare for salary conversations.

How to Know If Your Raise Is Fair

A fair raise depends on more than the average. To evaluate your raise, ask these questions:

• Did my raise keep up with inflation?
• Did my responsibilities increase this year?
• Did my performance exceed expectations?
• Is my salary competitive for my role, industry, and location?
• Did my company perform well financially?
• Are similar roles elsewhere paying more?

If your raise is below average but your workload grew significantly, you may have a strong case for a salary review. If your raise is average and your role stayed stable, it may be reasonable. If your raise is above average, congratulations: enjoy the moment before your streaming subscriptions notice.

How to Ask for a Better Raise

Asking for a raise works best when you treat it like a business case, not a complaint session. “Everything is expensive and I am tired” may be emotionally accurate, but it is not the strongest negotiation strategy.

1. Bring Evidence

Document your achievements. Include revenue generated, costs reduced, projects completed, customers retained, processes improved, people trained, or responsibilities added. Numbers are powerful because they make your impact harder to ignore.

2. Research Market Pay

Use reputable salary tools, job postings, professional associations, recruiter conversations, and industry reports to understand market rates. Focus on roles that match your location, experience, and responsibilities.

3. Time the Conversation Well

The best time to ask is often before salary budgets are finalized, not after raises have already been approved. You can also ask after a major achievement, promotion discussion, or expansion of your role.

4. Ask Clearly

Instead of saying, “I was hoping for more,” try: “Based on my expanded responsibilities and market research for this role, I would like to discuss adjusting my salary to $82,000.” Clear requests are easier to evaluate than vague disappointment.

5. Have a Backup Option

If your employer cannot increase base pay, ask about a bonus, title change, extra PTO, professional development budget, flexible schedule, or a written plan for a future salary review.

Common Reasons Raises Are Smaller Than Expected

If your raise was smaller than expected, it may not always be personal. Common reasons include:

• The company had a limited salary budget.
• Your department underperformed financially.
• Your salary is already high within the internal range.
• Your manager did not effectively advocate for you.
• Your accomplishments were not documented clearly.
• The company used broad, across-the-board raises instead of performance-based increases.
• Market demand for your role softened.

That said, a small raise can still be a signal. If your employer consistently gives below-market increases while your responsibilities grow, it may be time to update your resume, refresh your portfolio, and quietly investigate your options.

Experience-Based Insights: What Real Raise Conversations Often Feel Like

Many employees walk into raise season expecting a clean formula: work hard, get praised, receive a generous increase, celebrate with tacos. In real life, raise conversations are usually messier. One of the most common experiences workers describe is the gap between verbal appreciation and actual compensation. A manager may say, “You are essential to the team,” and then offer a 2.5% raise that feels less “essential” and more “coupon code expired.”

This disconnect happens because praise is free, while salary increases come from budgets. A manager may genuinely value your work but still have only a small pool of money to divide among several employees. That is why it is important not to rely only on being liked or being helpful. The employees who tend to do better in raise discussions are often the ones who keep a record of measurable wins throughout the year. They do not wait until review season to remember what they did in February. They track results as they happen.

Another common experience is realizing that loyalty does not automatically equal higher pay. Many workers stay in the same role for years, take on extra tasks, become the unofficial expert, and assume the company will eventually “do the right thing.” Sometimes it does. Sometimes the reward is a new login to another software system and the honor of training the person hired above your pay grade. This is why market research matters. Knowing what similar roles pay gives you confidence and prevents your salary expectations from being based only on internal history.

People also learn that timing can make or break a raise request. Asking after budgets are locked may lead to a polite no, even if your case is strong. Asking after a major achievement, before annual planning, or during a promotion conversation gives your manager more room to act. It is not just what you ask for; it is when you ask.

One practical lesson from raise conversations is that emotions are valid, but preparation wins. Feeling underpaid is frustrating. However, the strongest approach is calm, specific, and professional: “Here is what I contributed, here is how my role has expanded, here is the market range I found, and here is the salary adjustment I would like to discuss.” That tone makes it easier for a manager to support your request.

Finally, many employees discover that a raise conversation is not always a one-meeting event. Sometimes the first answer is no, but the useful answer is hidden in the follow-up: “What would need to happen for me to reach that salary?” A good manager should be able to explain the path. If there is no path, no timeline, and no clear criteria, that tells you something too. A raise is not just about money; it is also feedback about how your employer values the role you play.

Conclusion: So, What Is the Average Yearly Raise?

The average yearly raise in the U.S. is usually around 3% to 4%, with many recent salary budgets landing near the mid-3% range. A standard merit raise may be closer to 3%, while promotion raises, market adjustments, and job changes can be significantly higher.

Still, the best raise is not simply the one that matches the national average. It is the one that reflects your performance, responsibilities, market value, and cost of living. If your raise does not match your contribution, gather data, document your wins, and have a focused conversation with your employer. Your paycheck may not come with a cape, but it should at least keep up with the job you are actually doing.