The Cost of Living Is Through the Roof—Can You Use It to Leverage a Raise?

Just about everything is more expensive now, and wages aren’t keeping up
(Illustration: Stocksy)

With rent hikes, rising interest rates and inflation, it’s a well-known fact that the cost of just about everything is skyrocketing right now. At the same time, however, wages are staying stagnant—and Canadians are increasingly finding it difficult to make ends meet. 

Ottawa-based think tank, Canadian Centre for Policy Alternatives, recently published a new study that calculated how much workers would need to make in a 40-hour workweek in order to spend no more than 30 per cent of their income on housing (what they call “rental wage”). Unsurprisingly, rental wages are much higher than the hourly minimum wage in every province. In B.C., for example, you need to be making at least $27.54 an hour to afford a one-bedroom. (The minimum hourly wage in the province is $15.65.) In Ontario, you need to make $25.96 an hour for a one-bedroom (where the minimum hourly wage is $15.50). And the unaffordability is top of mind for everyone: Financial planning and education body FP Canada’s 2023 financial stress index finds that money is the leading source of stress for Canadians, for the sixth year in a row. 

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But can the rising cost of living be used as a bargaining chip to negotiate a raise, or other job perks? According to workplaces experts, it might not be the most effective argument. However, bringing up inflation to your manager might be a good way to negotiate for non-salary perks, like flexible hours or remote work. 

Can you ask for a raise based on inflation?

As workers are being asked to return to the office (often in urban cores), asking for a raise to help keep up with the cost of living in an expensive city like Toronto or Vancouver seems perfectly reasonable. However, experts say that employees shouldn’t use factors outside of their work performance, like inflation, when negotiating wages.

“Ultimately, any wage increase would have to be commensurate with the productivity of that worker,” says Rafael Gomez, the director of the Centre for Industrial Relations and Human Resources at the University of Toronto. Gomez says that employees citing the cost of living as a way in to get a raise might not see much success, especially since companies are also facing inflation and might be wary of providing wage increases that affect their bottom line—despite all-time high earnings for CEOs and an increasingly large pay gap between them and the average worker.

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However, there might be some non-salary benefits you can negotiate instead of a pay raise, which might help with the cost of living. These benefits include things like daycare stipends, meal plans for office workers, remote or hybrid work arrangements and flexible hours. “Those things have always been on the table,” says Gomez, especially for small and medium-sized enterprises (SMEs) where there’s less capital, but a bit more flexibility. 

How to negotiate a raise 

While it might not be the most effective bargaining chip, it’s undeniable that inflation has an impact on worker morale—and retention. HR solutions firm, Robert Half, found that 58 per cent of Canadian workers look for a new job because of insufficient salaries in its 2023 salary guide, and 45 per cent of senior managers retain employees by increasing compensation. (Interestingly, 45 per cent of senior managers also allow remote work in order to keep their employees). And, asking for a raise is typically a positive: Even if you’re rejected, asking can be a reminder to your manager of your hard work and might open up future opportunities within the company. 

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So how might you negotiate with the cost of living in mind, whether that’s a salary bump or for increased flexibility or remote work? Mike Shekhtman, a senior regional director at Robert Half, says that for a raise, the best tactic is to prepare a list of concise talking points about the value you bring to the organization before going into a conversation with your boss. Bring up contributions from the past year, ways you’ve taken on more responsibility or contributed to the company’s bottom line, or additional training or you’ve received since your last raise. 

There are a couple ways to figure out how much to ask for. If you’re asking for a raise to keep up with inflation, look up the Consumer Price Index (CPI) from the last 12 months to find the inflation rate (in Canada, it’s currently 6.8 per cent) and then calculate how much your salary should be upped by based on that rate. (For example, you’d want to ask for at least a 6.8 per cent increase this year to keep up with inflation). Another way to figure out your ask is to do some salary research online, or talk to your coworkers. Try to figure out how much your peers—people in the same city and industry and who have the same title and experience as you—are making. 

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When it comes to other benefits that would ease the burden of the cost of living, Shekhtman says that there’s nothing wrong with asking your manager for benefits like meal plans, discount commuter passes and subsidized travel as long as you can make the case for it. This might mean, for example, pointing out how much you’re spending on gas if you’re driving into the office compared to pre-pandemic times. 

Gomez adds that companies are making “more room” for those non-wage benefits and are more willing to provide them because they need workers in this very tight market. He says that companies looking at their bottom lines will definitely do the mental calculus and may decide that allowing staff to have flexible hours is cheaper than giving them raises. But, like Shekhtman says, make sure to ground your negotiations with a good case and be prepared to come up with an alternative plan (whether that’s rebalancing your own budget or finding a new, higher-paying or more flexible job) should your manager reject your proposals. 

Ultimately, there’s a greater awareness now of the high cost of living and the potential of non-traditional work agreements due to the pandemic. This means that employees feel more empowered to ask for raises and increased benefits—and employers are more open to these requests. “When pandemic restrictions were lifted, workers were left thinking about their jobs and how to make their jobs work better for them. They started asking for all these other benefits,” says Gomez. “Employers who aren’t sensitive to that will fall behind.” 

Rebecca Gao
Rebecca Gao
Rebecca Gao is a Toronto-based journalist writing about tech, business, culture and health. She has bylines in publications like Bon Appetit, Chatelaine, Toronto Life and Best Health.