Save time and avoid the trouble of working with numbers. Use our pay raise calculator to determine your percentage pay raise or new raise after comparing your previous and current salaries. All you need to do is to key in your previous and current earnings, and the calculator will automatically generate the percentage for you.
This pay raise calculator works for both annual and hourly wages.
How to calculate a pay raise?
A salary increase can come in different forms. You may get an increase after getting a raise, getting a promotion, or even after accepting a new, well-paying job. Regardless of the situation, you probably would want to know your pay rise in percentage form compared to your old pay rate. Knowing your percentage pay rise is vital because the cost of living inflation figures are mostly expressed as percentages. The percentage will help you compare your salary increment to other forces. Learning how to use a pay rise calculator will also help in comparing your current compensation to what other employers pay in your field.
Calculating your pay raise percent
Below is a simple procedure of how to calculate your pay rise in percentage.
Step 1: Subtract your previous salary from your current salary.
Let’s say you used to earn $45,000 per annum at your old job before accepting a new position that pays you $55,000 per annum. To get the difference in earnings, you would take $50,000, which is your current salary and subtract $45,000, being your previous salary. i.e. $55,000 – $45,000 = $10,000.
If you earn on an hourly basis, it may be somewhat complicated to know your total annual salary increment. Don’t worry; you can still use your previous and current hourly rate to calculate your salary increment. For instance, if your rate was $14/hour before increasing to $20/hour, then your increment would be $20 – $14 = $6.
Step 2: Divide the salary increment difference by your previous salary.
To convert your salary increment amount into a percentage, you first need to convert it into a decimal. You can do this by taking the difference you got in step 1 and dividing it with what you used to earn before getting an increment. Based on our example above, this can be done by taking $10,000 and dividing it by $45,000. i.e. $10,000 / $45,000 = 0.2222.
You can do the same for the hourly percentage wage increase. From the example above, take $6 / $14 = 0.429
Step 3: Multiply the resulting decimal figure by 100.
To convert any decimal number into a percentage, we simply multiply the decimal number by 100. From our previous example, you’d multiply 0.222 by 100. i.e. 0.222 x 100 = 22.2% This means that your new annual salary of $55,000 is roughly 122.21% of your previous $45,000 salary. In other words, it means that you received a 22.2% increase to your annual wage.
For the hourly rate, you will use the same procedure to calculate your pay rise. This would be 0.429 x 100 = 42.9%, which is a 142.9% increase to your hourly wage.
To check if you have the right percentage figure, you can multiply your previous salary or an hourly rate by the percent increase. For example, you can multiply $45,000 x 22.2/100, the answer is $54,900, which rounds up to $55,000 per annum. Likewise, $14 x 42.9/100 = $6.006. per hour.
What about additional Benefits?
There’s more to pay than just using a pay raise calculator. Apart from a better basic salary, you should also factor in all the additional benefits where applicable. If you just started a new job at a different company, then you might have to consider more than just the salary when calculating your percentage pay rise. A new job can come with several other benefits packages that you might consider. Some of them include:
Insurance premiums / benefits
You’ll need to compare the coverage of your previous job and your current job; that’s if both jobs have employer-based insurance coverage. Where applicable, you’ll also have to factor all the premium deducted from your paycheck. For instance, paying $200/month instead of $100/month in premiums for the same type of coverage would definitely negate part of your salary increase. Also, consider the scope of the insurance coverage (do they cover dental and eye problems?), and the yearly deductibles you’ll be required to pay.
Commissions and Bonuses
Although these may not be part of your basic salary, remember to include them when calculating a pay rise. Your salary may give you a better paycheck, but if your job allows you to earn bonuses, you will have room for more. But don’t forget that this amount won’t be consistent because it will depend on your performance.
Most corporations offer a retirement plan. This plan allows you to take pre-taxed wages and save them for your retirement. Most companies contribute a certain percentage of what an employee contributes to his/her 401k. If your current employer matches a certain percentage of your retirement savings and your previous employer didn’t consider that as free additional money in your retirement kitty.
Employers who offer pension for the number of years of continuous service also need consideration. If your new position offers a good pension plan after twenty years, which your previous position did not, you should also consider it as a benefit. Higher hourly or yearly salary might offer more money immediately, but it’s also about what you get after staying loyal to your employer for years. However, remember that pensions are not very common nowadays. Yes, they do exist, but they don’t always disburse as expected. In most scenarios, you’ll find out that all the funds were mismanaged, leaving very little or completely nothing for the pension scheme.
Isn’t it time you should analyze how much your salary raise benefits you, and in what percentage have you increased your earnings? When asking for a raise, this will help you adjust your budget and plan accordingly. Have you just been rewarded by your employee for a job well done by giving you a raise? Whether you receive your increment through a promotion, moving to a different company, or just a regular pay rise, it’s essential to have an idea of how much value the increment brings to your daily life. You can decide to do the calculation yourself or by using a pay raise percent calculator.