alt Hacker NewsRemember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.
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Not necessarily, depends on the distribution of your own expenses. If you deviate from the average urban household (lets say, you have a particularly long commute or your car isn't as fuel efficient as the average. Look at the increase on fuel prices, 40.5%!).
If you're at $5,000/month, a 4.2% raise puts you at $5,210. If you're spending $600/month on gas (not unreasonable for someone that drives an SUV and lives in the suburbs instead of in the urban core), you still come out behind.
Much more since the numbers are cooked anyways. Car model N cost 10k, and car model N+1 costs 15k, if N+1 has 2 more airbags, one more gear, a keyless starter it will be counted way under 50% inflation, even though you pay 50% more.
Most of the average joe's money is spent on housing + food + energy these things are all way above the calculated """average""" inflation
Typically, you need a little more to make up for the difference in how much more taxes you pay at the marginal end vs the average for your total income...
The median earner with a standard deduction would need a ~4.7% raise to stay even...
"Inflation" is also increasingly distributed unevenly. The top 10% continues to make up a larger and larger portion of spending. It is entirely possible for ~4.2% inflation to be substantially higher (or lower) for the median household than the overall reported number.
> 4.2% is what you need to stay even
On average, nationally. Look up your state or metropolitan-area CPI. Or better yet, track your actual expenses and project forward.
Most employers in the US don’t realize this and act like cost of living adjustments are major rewards if they do them at all.
This is why it's important to get paid in stock. I get an automatic extra 100k a year if inflation runs hot!
Also, any asset that isn’t appreciating at least 4.2% is losing value.
Ah…inflation.
Many people here make more than they spend, and this is simply inaccurate when that's the case.
edit: I've explained how this works in a reply below.
It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even.
In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.