“You’re getting a 3% raise” can mean very different things. Knowing whether it’s a cost-of-living adjustment or a merit increase helps you judge whether you actually got ahead.
Cost-of-living adjustment (COLA)
A COLA is meant to keep your pay’s buying power level as prices rise. Many organizations look at inflation measures like the BLS Consumer Price Index when they set it. A COLA that matches inflation means your real pay stayed about the same. You didn’t really get a raise.
Merit raise
A merit increase rewards performance, new skills or added responsibility. Some companies roll COLA and merit into one number, so ask how your increase was calculated.
How to check if you got ahead
- Look up the CPI change over the past 12 months on the BLS site. The headline “12-month percent change” is the number most people quote.
- Subtract it from your raise percentage. If your raise was smaller than inflation, your real pay went down.
- Compare against the BLS Employment Cost Index, which tracks how employer pay and benefit costs are changing across the economy and by industry.
Using this in a raise conversation
- Lead with your results and responsibilities. That’s the case for merit.
- Use inflation data as context, not as the whole argument: “Last year’s increase was below the 12-month CPI change, so in real terms my pay went down while my responsibilities grew.”
- Bring market data for your role. See how to benchmark your salary with BLS data.
Other levers
If the base salary budget is fixed, ask about a title change, a one-time bonus, extra PTO, training budget, remote days, or a scheduled review in six months.
Related: how to ask for a promotion