Pay Raise Purchasing Power Calculator
Calculate a raise’s inflation-adjusted value.
Pay Raise Purchasing Power Calculator: Scenario Inputs
Annual percentage rate or benchmark index change.
Inflation & Purchasing Power Analysis
Over 3 years at 3.5% inflation, a $75,000 salary requires $83,154 to retain equal purchasing power. Without matching raises, your real compensation experiences an effective reduction of $7,355 (-9.81%).
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How Pay Raise Purchasing Power Calculator Works?
The Pay Raise Purchasing Power Calculator works by splitting a raise into the part that covers inflation and the part that adds real value.
Enter salary and raise
Type the salary before the raise and the raise in dollars or percent.
Enter inflation
Type inflation over the period the raise covers.
Split the raise
The calculator finds the inflation-cover portion, Salary × inflation, and the remainder.
Read the real value
The output gives the real value of the raise in today's dollars and as a share of the nominal raise.
Pay Raise Purchasing Power Calculator Formula
The Pay Raise Purchasing Power formula deflates the new salary and subtracts the old salary.
Real Raise $ = (Salary + Raise) ÷ (1 + π) − Salary
Inflation Cover $ = Salary × π
Variables
- Salary
- Pay before the raise
- Raise
- Nominal raise in dollars
- π
- Inflation over the same period
Worked example
A $3,000 raise on a $60,000 salary during 4% inflation has a real value of $577. Inflation cover takes $2,400 of the nominal raise.
Pay Raise Purchasing Power Calculator Conversion Table
This table shows the real value of 5 raises on a $60,000 salary at 3% and 5% inflation.
| Nominal raise | Raise % | Real value at 3% | Real value at 5% | Share kept at 3% |
|---|---|---|---|---|
| $1,500 | 2.5% | -$291 | -$1,429 | -19% |
| $3,000 | 5.0% | +$1,165 | +$0 | 39% |
| $4,500 | 7.5% | +$2,621 | +$1,429 | 58% |
| $6,000 | 10.0% | +$4,078 | +$2,857 | 68% |
| $9,000 | 15.0% | +$6,990 | +$5,714 | 78% |
What is Pay Raise Purchasing Power Calculator?
The Pay Raise Purchasing Power Calculator is a tool that calculates the inflation-adjusted dollar value of a pay raise. The calculator shows how much of a raise inflation absorbs and how much is left as extra buying capacity.
A $3,000 raise on a $60,000 salary during 4% inflation adds less than $600 of real buying capacity.
What are the uses of Pay Raise Purchasing Power Calculator?
There are 4 main uses of the Pay Raise Purchasing Power Calculator.
See a raise's true size
Find how many dollars of new buying capacity a raise delivers.
Compare raise offers
Rank offers by real value instead of headline dollars.
Explain pay letters
Show staff the inflation-cover and real-growth parts of a raise.
Plan spending
Budget extra spending from the real part of a raise only.
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