This post originally appeared on MainStreet.
In considering the slow economic recovery and persistent stagnant wages, it is surprising to find that negotiating your salary can still lead to a significant increase in overall lifetime earnings—and that it may be exactly the right time to apply this information.
“The good news is that though the economy is still sluggish, it is recovering,” says Abby Euler, general manager of Salary.com. “There are many key indicators that it may be time to start thinking about negotiation again.”
Research by Salary.com showed that a 4% raise every three years can increase total earnings by more than $1 million in a lifetime.
The negotiating can still be daunting, especially in this economy.
Last month, The Wall Street Journal reported the economy has been growing at only 2% — well below the pre-recession average of 3.5%. With labor demand low, employers have not been under any real pressure to raise wages on their own. Even several years after the Great Recession, wages have not kept pace with inflation. In fact, the average hourly wage for a worker not in the government sector or working in a supervisor position came to a pitiful $8.77 an hour when adjusted for price increases, according to data from the U.S. Labor Department.
This has led many in the workforce to feel dispirited about the prospect of asking for a wage increase.
“Workers feel like they have absolutely no bargaining power,” Robert Mellman, an economist at JPMorgan Chase , told WSJ.
At the same time, workers also do not feel there are better job options. In June, only 1.6% of employed Americans quit their jobs — compared with 2% to 2.2% annually at pre-recession levels. This may explain why 41% of Americans didn’t attempt to negotiate for a raise at their current job or negotiate salaries when offered a new position.
Research by the economists at the Federal Reserve Bank of San Francisco also found that during the past three recessions since 1986 — and in particular, during the 2007-09 downturn — companies opted to lay off some of their workforce and keep other workers at current wages rather than cut wages across the board.
“As the economy recovers, pent-up wage cuts will probably continue to slow wage growth long after the unemployment rate has returned to more normal levels,” the researchers said in their working paper.
Yet Salary.com found that 84% of the employers they surveyed expect prospective employees to negotiate salary when offered a position, as well as for current employees to ask for a raise.