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At this point, we’re more than a year and a half into the coronavirus pandemic, and many workers are still feeling the impact of this global event. According to the latest MagnifyMoney survey of almost 1,000 full-time workers, a third of them had their pay cut in the past year — a slight improvement from 38% in 2020.
Of the workers whose pay was reduced, nearly half report it hasn’t yet been restored. Keep reading for more insights from MagnifyMoney’s third annual survey on pay.
One-third of full-time workers received pay cuts in the past year, a slight improvement from the percentage who said the same in 2020 (38%). Last year, 34% alone cited pay cuts due to the coronavirus pandemic.
Women are more likely than men to have their pay cut (36% versus 30%), and that gap widens for Black workers compared to white workers (41% versus 30%). Meanwhile, workers whose household incomes are below $35,000 are most likely to have their pay cut (42%), while those who earn $100,000 or more are least likely (27%).
Among those who took a pay cut in the past year, nearly half report their pay rate hasn’t been restored.
This is most common among baby boomers (ages 56 to 75), at 55%, followed by:
In addition, women who have had their pay cut are more likely to say it hasn’t been restored (52% versus 45% for men).
According to MagnifyMoney senior content director Ismat Mangla, workers who have their pay cut have options for moving forward.
“See if you can negotiate back an increase or other benefits,” says Mangla. “Can you get some additional vacation time or other benefits? Talk to your employer about whether they have a timeline in mind to restore your pay.”
Otherwise, she recommends considering that this may be your cue to look for another job.
On the other hand, some workers are seeing improvements in their pay. Nearly 6 in 10 (58%) full-time workers report receiving a raise this year, a jump from 54% in last year’s survey. (Consider a high-yield online savings account to help that pay increase grow.)
As expected, higher-income earners report this at a higher rate. Nearly 3 in 4 (73%) consumers with incomes of $100,000 or more got a pay raise in the past year, compared with 51% of those making less than $35,000.
As for why they received the pay raises, 41% say they were promoted, followed by:
Men are more likely to say the increase followed a promotion (43%, versus 39% of women), while more women achieved this by changing jobs (20%, versus 12% of men).
Interestingly, many of those who received a pay raise and are saving for retirement didn’t increase contributions (46%), which leaves money on the table for workers whose employees match some or all of their retirement contributions.
The survey finds that women are less likely than men to increase their retirement contribution after a pay raise (47% versus 60%).
In 2021, women earn 82 cents for every dollar that men earn, per PayScale, so the gender pay gap is still very real.
Alongside men being less likely than women to have their pay cut, they’re also seeing larger salary increases. In fact, 52% of men who say they received a pay raise saw an increase of $5,000 or more annually, compared with just 36% of women reporting the same. Men are also slightly more likely to see pay increases of $20,000 or more (7%, versus 5% of women).
Mangla isn’t surprised that women feel more of a career and financial impact from the coronavirus pandemic.
“The gender pay gap is an ongoing problem, and the pandemic certainly exacerbated it,” Mangla says. “Caregiving duties, for example, fell disproportionately to women, so many had to pull back on work to care for children or elderly parents.”
Many workers are optimistic that all their hard work will pay off, with half of full-time workers expecting a bonus this year and 42% believing they’ll receive a pay raise next year. On the pay raise front, that’s an increase from 39% last year — though a drop from 47% in 2019.
Men are more confident than women that they’ll receive bonuses in 2021 (54% versus 44%) and pay raises in 2022 (46% versus 36%).
Those with higher salary ranges are more likely to have already received their bonus at the amount they expected — 41%, compared with 22% of those who make less than $35,000 a year.
Most respondents (44%) say excellent job performance is the best way to get a pay raise, followed by changing jobs (24%).
Millennials (26%) are most likely to believe that quitting a job and getting a new one is the right path forward to a raise — this comes as no surprise, since millennials are known for turning to new jobs when they want to give their career a push forward.
Baby boomers, on the other hand, are the least likely to think that switching jobs to secure a higher pay rate is the way to go.
While it’s understandable why some frustrated workers are tempted to make a job switch, Mangla warns against doing this too often.
“The truth is, you might be able to make more money if you change jobs,” Mangla says. “You don’t necessarily want to job hop too often, but you’re more likely to get bigger salary increases if you leave your current job for another one. That’s when you can negotiate big jumps in income, like 10% to 20%.”
Mangla agrees that excellent performance is important to setting yourself up for a raise, but she worries that it isn’t quite enough to get the job done.
“Just performing well doesn’t necessarily guarantee that you will get a raise,” Mangla says. “You have to be proactive.”
To make securing a raise more obtainable, she recommends taking the following steps:
“Bottom line, you won’t just get a raise for doing a good job,” Mangla says. “You have to advocate for yourself.”
MagnifyMoney commissioned Qualtrics to conduct an online survey of 950 U.S. consumers employed full time, from Oct. 26 to Oct. 29, 2021. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.
We defined generations as the following ages in 2021:
While the survey also included consumers from the silent generation (those 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.