A raise is a number on paper. What it buys depends on how fast prices rise in the same period. This guide shows how to calculate a raise as a percentage or a flat amount, convert it to monthly, bi-weekly and hourly pay, and adjust it for inflation, with worked examples you can check by hand.
Step 1: Calculate the raise
For a percentage raise, multiply current pay by one plus the raise rate:
For a flat raise, add the amount to current pay. To see a flat raise as a percentage, divide it by current pay:
If you only know the new pay that was offered, the raise is the new pay minus the current pay.
Example: A salary of $60,000 with a 4% raise becomes $60,000 × 1.04 = $62,400. The raise is $2,400.
Step 2: Convert the raise to monthly, bi-weekly and hourly pay
Employers quote pay in different ways, so it helps to put the before and after numbers on the same basis. Divide annual pay by 12 for monthly pay, by 26 for bi-weekly pay, and by 2,080 for hourly pay. The 2,080 figure assumes 40 hours a week for 52 weeks.
| Pay basis | Before | After | Difference |
|---|---|---|---|
| Annual | $60,000.00 | $62,400.00 | +$2,400.00 |
| Monthly | $5,000.00 | $5,200.00 | +$200.00 |
| Bi-weekly | $2,307.69 | $2,400.00 | +$92.31 |
| Hourly | $28.85 | $30.00 | +$1.15 |
If your schedule is different, change the hours. For example, 35 hours a week for 50 weeks is 1,750 hours a year, so $60,000 works out to about $34.29 per hour.
Step 3: Adjust the raise for inflation
Nominal pay is the number on your offer. Real pay is that number divided by price growth:
Using the example above with 3% inflation:
- Real pay: $62,400 / 1.03 = $60,582.52
- Real gain: $60,582.52 − $60,000 = $582.52, about 0.97% of current pay
- Inflation erosion: $62,400 − $60,582.52 = $1,817.48
Subtracting 3 from 4 gives 1%, while the division method gives 0.97%. The gap between the two is small at low rates.
When the raise percentage equals the inflation rate, real pay is unchanged (1.03 / 1.03 = 1). A smaller raise lowers real pay. A 2% raise on $60,000 gives $61,200. At 3.5% inflation, that is $59,130.43 in real terms, which is $869.57 below the current salary, or about 1.45% lower.
Which inflation rate to use is your decision. You can use a figure from your country's official statistics office for the period you are comparing, or test several values.
Example: hourly worker with a flat raise
An hourly worker earning $22.00 gets a flat raise of $1.50. New hourly pay is $23.50, a raise of about 6.82% ($1.50 / $22.00). Over 2,080 hours, annual pay moves from $45,760 to $48,880, a difference of $3,120.
At 3.5% inflation, $48,880 / 1.035 is about $47,227.05 in real terms. That is $1,467.05 above the current annual pay, or about $0.71 per hour.
Calculate it with the ToolsGrid Pay Raise Calculator
The Pay Raise Calculator follows the same steps:
- 1. Choose a pay basis: annual, monthly, bi-weekly or hourly.
- 2. Enter your current pay.
- 3. Pick a raise type: percentage, flat amount or new pay.
- 4. Set the expected inflation rate with the slider or the input field.
- 5. Read the table, which shows current pay, new pay, the raise and the inflation-adjusted value for annual, monthly, bi-weekly, weekly and hourly pay.
You can also change hours per week and weeks per year, copy a text summary, or reset to the defaults. The calculator works with gross pay and does not estimate taxes. Calculations are processed in your browser, not uploaded to ToolsGrid servers.
Before you negotiate
- Compare gross pay to gross pay. Take-home pay depends on tax rules and deductions that vary by location.
- Compare pay and inflation over the same time period.
- Look at the whole package. Paid leave, bonuses, benefits and working hours also affect what an offer is worth.
- Keep your achievements and numbers ready. A current resume helps, and the Free ATS Resume Builder can create one in your browser.
Frequently asked questions
How do I calculate a percentage raise?
Multiply your current pay by 1 plus the raise percentage divided by 100. For a 4% raise on $60,000, the result is $60,000 × 1.04 = $62,400.
How do I turn a flat raise into a percentage?
Divide the raise amount by your current pay and multiply by 100. A $1.50 raise on $22.00 per hour is 1.50 / 22.00 × 100, which is about 6.82%.
How do I convert annual pay to an hourly rate?
Divide annual pay by the number of hours you work in a year. A 40-hour week over 52 weeks is 2,080 hours, so $62,400 per year is $30.00 per hour.
Is a 3% raise enough if inflation is 3%?
A 3% raise with 3% inflation leaves real pay unchanged, because 1.03 / 1.03 = 1. The raise keeps the same purchasing power rather than adding to it.