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071 How Big Is A Typical Raise For A Developer? Cost Of Living? More? · DevQuestions with Tim Corey

• 0:00
  SPEAKER_00: Welcome to the Dev Questions Podcast with Tim Corey.
• 0:03
  SPEAKER_00: Join us each episode as we tackle the questions you are asking about a career in software development, understanding the industry, and new technology.
• 0:12
  SPEAKER_00: If you're just starting out or you want to grow stronger as a developer, this is the place to get your questions answered.
• 0:19
  SPEAKER_00: Now, here's your host, expert developer and online educator, Tim Corey.
• 0:25
  SPEAKER_01: How big is a typical raise for a developer?
• 0:29
  SPEAKER_01: Is it cost of living?
• 0:31
  SPEAKER_01: Is it more?
• 0:32
  SPEAKER_01: Is it less?
• 0:33
  SPEAKER_01: Let's talk about this.
• 0:34
  SPEAKER_01: This is a question that came up recently, and I really like the idea of having open conversations about money, especially about what you get paid and when you get paid, and how often or how much you get paid.
• 0:47
  SPEAKER_01: Because when you hide that information, what happens is that businesses benefit.
• 0:55
  SPEAKER_01: And while it's not bad that businesses benefit from things, it's not great that they're benefiting in an extent that they're taking money away from people.
• 1:05
  SPEAKER_01: So let's have an open conversation about this and talk about really what can you expect as a developer when it comes to raises, and then is there other ways to get a raise?
• 1:20
  SPEAKER_01: So let's first talk about cost of living.
• 1:22
  SPEAKER_01: Because this is a this is a big question mark for people.
• 1:25
  SPEAKER_01: We use this term a lot.
• 1:26
  SPEAKER_01: Well, cost of living raise.
• 1:28
  SPEAKER_01: What is cost of living?
• 1:30
  SPEAKER_01: And cost of living is it's a number that is based upon where you live.
• 1:36
  SPEAKER_01: It depends on a number of factors like how much it costs to do typical things.
• 1:41
  SPEAKER_01: And the US, we have the Social Security Administration, which does create their own cost of living raises, which a lot of people look to to see, okay, they're saying it's this percentage.
• 1:54
  SPEAKER_01: That's for the US in general, but at the same time, it does give us a decent idea of what they're thinking, at least.
• 2:02
  SPEAKER_01: Whether it's logical or not, you know, that your mods may vary.
• 2:07
  SPEAKER_01: So let's talk about the last six years or so that the Social Security Administration has put out what the cost of living uh allotment should be.
• 2:18
  SPEAKER_01: So in 2021, it's 1.3%.
• 2:22
  SPEAKER_01: In 2020, it was 1.6%.
• 2:25
  SPEAKER_01: In 2019, it was 2.8%.
• 2:28
  SPEAKER_01: In 2018, it was 2%.
• 2:30
  SPEAKER_01: So you're getting this range here, where okay, it's between 1 and 3%, right?
• 2:36
  SPEAKER_01: Well, but in 2017, it was 0.3%, and 2016 it was zero percent.
• 2:43
  SPEAKER_01: So, yes, there's a range here, and it's between zero and three percent, is what the social security administration, what the government says for across the US is cost of living.
• 2:57
  SPEAKER_01: But the reality is that cost of living really depends on your lifestyle and your major costs: food, housing, transportation, maybe entertainment as well.
• 3:09
  SPEAKER_01: So those are the big cost utilities, um, kind of fit into the housing.
• 3:14
  SPEAKER_01: So um, those are things that for you, your cost of living may change differently than the average for your city or for your state or for the US in general.
• 3:26
  SPEAKER_01: But you have to base it on something, right?
• 3:28
  SPEAKER_01: So if we talk about um cost of living, we roughly say it's between zero or one and three percent is a rough cost of living for the US.
• 3:40
  SPEAKER_01: Your area may vary, and really, um, even if you're in the US, your area may vary as well.
• 3:46
  SPEAKER_01: Now, um, you know, 2020, your cost of living may went may have gone down.
• 3:51
  SPEAKER_01: I mean, we didn't have as much transportation, you probably stayed in more.
• 3:56
  SPEAKER_01: Um, you did more things from your couch rather than in the office.
• 4:00
  SPEAKER_01: You might have had government assistance, which means your income went up and your expenses may have gone down at the same time, and you probably had less vacations, less entertainment out.
• 4:11
  SPEAKER_01: Um, so your costs may have gone down, but at the same time, you know, if you were working a side job as an Uber driver or you were doing DoorDash, something like that, your costs, your income may have gone down too.
• 4:25
  SPEAKER_01: So it's a really tricky metric for businesses.
• 4:29
  SPEAKER_01: Now, for a business, the goal should be let's talk about what it should be, and let's talk about the reality of it.
• 4:36
  SPEAKER_01: Because as a business, the goal should be to grow an employee's salary beyond just maintaining the same ground or cost of living.
• 4:46
  SPEAKER_01: The idea of cost of living is things cost more over time, therefore, we raise the salary or raise your income to match that so you keep treading water.
• 4:59
  SPEAKER_01: But think about why that doesn't make sense.
• 5:02
  SPEAKER_01: Because when you were hired, let's say you were hired as an entry-level person with no experience.
• 5:10
  SPEAKER_01: Well, after a year, you're no longer that entry-level person.
• 5:14
  SPEAKER_01: You are a developer who has one year of work experience, and even more than that, you have one year of experience at that job.
• 5:25
  SPEAKER_01: You are much more valuable than you were last year to your employer.
• 5:29
  SPEAKER_01: So you've gained more skill over time, you probably have more responsibilities, and you're adding more value to the company than you were a year ago.
• 5:39
  SPEAKER_01: If those things aren't true, then that's a different issue that may involve you not getting a race, because you definitely should be adding more value to the company over time, you should be growing in your skills and potentially be taking on more responsibility as you grow.
• 5:57
  SPEAKER_01: So if those are true, if you have grown, you have gained more skills and more work experience, then just maintaining essentially the same same salary as when you were hired doesn't seem to make sense because you are more valuable.
• 6:15
  SPEAKER_01: Okay, so it should be the company's goal, a business's goal, would be to grow your salary as you grow.
• 6:24
  SPEAKER_01: So not just cost of living, we should probably be a standard baseline.
• 6:28
  SPEAKER_01: You should probably give all your employees a standard baseline of one to three percent over time, but then you should be looking to see okay, how much did you grow and can we uh have your salary reflect that because you are adding more value to the company?
• 6:46
  SPEAKER_01: Now, that's what should happen.
• 6:48
  SPEAKER_01: Let's talk reality.
• 6:51
  SPEAKER_01: Reality is that a lot of businesses look at employees as expenses, not as assets.
• 6:58
  SPEAKER_01: So when they're looking at employees, they say, What can we get away with paying them because they want to put that money somewhere else?
• 7:08
  SPEAKER_01: Now, before you get all mad at companies that say, Oh, they're horrible people, um, which some companies can be, but think about it from your perspective.
• 7:19
  SPEAKER_01: I don't want to sound insulting here, but if your if your uh let's say Netflix bill was$10 a month, do you want to pay$15 a month to Netflix?
• 7:32
  SPEAKER_01: No, you want to pay just what you can so you can have the rest of it for yourself.
• 7:37
  SPEAKER_01: Well, that's what everyone wants.
• 7:40
  SPEAKER_01: They want to keep more money for themselves.
• 7:42
  SPEAKER_01: Is that right when it's people, not Netflix?
• 7:47
  SPEAKER_01: Probably not, but that's what's going on.
• 7:50
  SPEAKER_01: So sometimes businesses can forget that people are assets, they're not just cost centers.
• 7:58
  SPEAKER_01: So, in that case, they will shoot for the one to three percent.
• 8:04
  SPEAKER_01: And when I look around the community, when I talk to people, when I look on different forums and threads and see what people are getting paid, the 0 to 3% uh raise every year is pretty much the norm.
• 8:18
  SPEAKER_01: The only exception to that is the pay decrease, where a company says, hey, we're not doing well, we're gonna actually reduce your salary or reduce the benefits, or um, you know, maybe just stay flat and have have no increases at all.
• 8:35
  SPEAKER_01: But generally, uh 0-3% is the the average range that I am seeing.
• 8:41
  SPEAKER_01: Now, that's not great, that's not ideal, and this is why we have the culture we do in software development.
• 8:50
  SPEAKER_01: Switching jobs is probably the best way to get a raise, a best guaranteed way to get a raise.
• 8:58
  SPEAKER_01: So it seems as though the average for switching jobs is about a 10% raise.
• 9:04
  SPEAKER_01: I see a number of examples of people who have switched jobs and then switched back or switched jobs continually year after year.
• 9:12
  SPEAKER_01: And it feels like, hey, you're not being loyal to your company, you're not, you know, yeah, but if they're not loyal to you, there's a problem there.
• 9:22
  SPEAKER_01: And I do want to see people really do their all for where they're at because you're getting paid.
• 9:29
  SPEAKER_01: Do your best, but at the same time, still look out for yourself, still protect yourself.
• 9:35
  SPEAKER_01: And if moving jobs can give you a better, um, a better raise, that might be a good option.
• 9:43
  SPEAKER_01: So 10% seems to be about the the net gain on average for switching jobs, and part of that's because you probably wouldn't switch jobs for a 5% loss.
• 9:54
  SPEAKER_01: Most of the time, I have done it.
• 9:56
  SPEAKER_01: I have done it for a significant loss because it moved me from one position to another that I want to get out of one position and get into another.
• 10:04
  SPEAKER_01: So it can't happen, but in general, you switch jobs to get a pay increase.
• 10:11
  SPEAKER_01: Now, what should you ask for from your boss for a race?
• 10:17
  SPEAKER_01: This is gonna be a tricky conversation.
• 10:19
  SPEAKER_01: It's kind of like when you're applying for a job and they say, Well, what's your salary requirements?
• 10:26
  SPEAKER_01: What do you say to that?
• 10:27
  SPEAKER_01: Um, as much as you'll give me.
• 10:29
  SPEAKER_01: You know, that that's kind of what you're asking for, right?
• 10:32
  SPEAKER_01: And if you say, Well, I, you know,$50,000 a year, they were expecting to pay$75, you know, you've lost$25,000 essentially, um, and left it on the table.
• 10:43
  SPEAKER_01: But if they were expecting to pay between$40,000 and$50,000, you say$50,000, then maybe you max out your value.
• 10:52
  SPEAKER_01: So that's a tough place to be.
• 10:54
  SPEAKER_01: The same thing is true for a race.
• 10:56
  SPEAKER_01: Um, if you ask for a percentage and they're expecting to give more, then you're kind of leaving stuff on the table, unless you have a good boss who says, I was actually saying, you know, more than that.
• 11:07
  SPEAKER_01: I was gonna give you more than that.
• 11:08
  SPEAKER_01: So in general, what I suggest is to wait for the um for the percentage to come out.
• 11:17
  SPEAKER_01: So if your boss comes and says, Okay, you know, here's your review, um, let's talk about how much I should give you.
• 11:23
  SPEAKER_01: I'm planning on giving you three percent this year.
• 11:27
  SPEAKER_01: If they say anything below five percent, I would ask for five percent.
• 11:34
  SPEAKER_01: Now, that's not an easy conversation to have.
• 11:37
  SPEAKER_01: Some people just can't do that.
• 11:39
  SPEAKER_01: I understand that, I understand maybe the dynamic won't work with your boss.
• 11:44
  SPEAKER_01: If that's the case, it may be time to look for another job.
• 11:49
  SPEAKER_01: It may be time to have some conversation with your boss and say, hey, you know, I don't feel comfortable asking for what I feel like I'm I'm worth.
• 11:58
  SPEAKER_01: Let's talk about that.
• 12:00
  SPEAKER_01: Because you do need to grow and be able to um expand your ability to have a conversation.
• 12:06
  SPEAKER_01: But if your boss is not gonna be receptive, then you can't ask for it.
• 12:11
  SPEAKER_01: Therefore, your other options are to get another job or to just live with it.
• 12:16
  SPEAKER_01: So, but if they offer you less than less than 5%, say, hey, I think I would I am worth five percent.
• 12:25
  SPEAKER_01: But you can't just say, give me five percent.
• 12:28
  SPEAKER_01: That's not gonna fly, mostly.
• 12:31
  SPEAKER_01: But instead, you need to say why five percent is important.
• 12:36
  SPEAKER_01: So, talk about the value you've gained over the past year.
• 12:40
  SPEAKER_01: So, how have you grown?
• 12:42
  SPEAKER_01: How have you improved as a developer?
• 12:45
  SPEAKER_01: How have you improved in the company?
• 12:48
  SPEAKER_01: Talk about your price to replace you.
• 12:51
  SPEAKER_01: So, talk about how, hey, you hired me at this rate because you wanted a cheap employee, but that took a lot of startup time, and now I'm over that and I'm producing a lot of value for you.
• 13:08
  SPEAKER_01: So when it comes to a 1 to 3% pay increase, that's just cost of living, which is maintaining that hiring salary, really.
• 13:18
  SPEAKER_01: So, why am I maintaining a salary that is for a person who doesn't know what they're doing when I do know what I'm doing, and so I've moved beyond that.
• 13:30
  SPEAKER_01: Okay.
• 13:31
  SPEAKER_01: So, talk about, if possible, the opportunities that are available elsewhere.
• 13:37
  SPEAKER_01: Now you gotta be careful on this.
• 13:39
  SPEAKER_01: You do not want to say, hey, if you don't give me 5%, I'll leave.
• 13:43
  SPEAKER_01: Unless you're prepared to leave.
• 13:45
  SPEAKER_01: Because your boss says, Yeah, not doing it.
• 13:48
  SPEAKER_01: You're kind of in a weird spot then.
• 13:50
  SPEAKER_01: Either you leave or you show that you were just bluffing and that doesn't go well.
• 13:56
  SPEAKER_01: So maybe be talking to other companies and see what they're offering and see if you could get a job somewhere else, and try not to couch it in terms of an ultimatum.
• 14:09
  SPEAKER_01: Give me 5% or else.
• 14:11
  SPEAKER_01: Don't put the proverbial gun to your boss's head and expect your boss to be happy.
• 14:18
  SPEAKER_01: Instead, say, hey, you know, looking around, there's opportunities all around for this position that I'm in right now for other companies that that is 10% more than what I'm getting here.
• 14:32
  SPEAKER_01: That the starting salary is more, the benefits are more, the whatever is more.
• 14:37
  SPEAKER_01: And I I just feel like maybe I'm worth more than what you're offering.
• 14:43
  SPEAKER_01: And don't ask for the same thing they give necessarily.
• 14:46
  SPEAKER_01: So if they're saying it's a 10% raise to go somewhere else, say I'm only asking for 5%.
• 14:51
  SPEAKER_01: I'm not asking for you to match that other company.
• 14:54
  SPEAKER_01: I just think that my value is more than what you're offering.
• 15:00
  SPEAKER_01: So that conversation, if you can have it, it should be part of your annual conversation over raises.
• 15:08
  SPEAKER_01: And yes, raises should come annually.
• 15:11
  SPEAKER_01: So 5% is what I'd shoot for.
• 15:14
  SPEAKER_01: Now, if you can get more, great.
• 15:16
  SPEAKER_01: Like I said, don't say 5% until they give you the percentage.
• 15:21
  SPEAKER_01: Because if they say, hey, we're only gonna give you like 7% this year, go, you know what?
• 15:27
  SPEAKER_01: That's okay.
• 15:28
  SPEAKER_01: I I appreciate that.
• 15:29
  SPEAKER_01: 7%, I think I can I can live with that.
• 15:32
  SPEAKER_01: You got 2% more than you're expecting, you know.
• 15:35
  SPEAKER_01: But at the same time, if they offer you a low ball number, push back on that.
• 15:41
  SPEAKER_01: Okay.
• 15:42
  SPEAKER_01: Now let's talk briefly about bonuses because this is something that can be used as actually detrimental to employees.
• 15:52
  SPEAKER_01: A bonus is a one-time expense for a company, it's a one-time expense.
• 15:58
  SPEAKER_01: And for employee, it's a one-time boost, which means there's no long-term benefit.
• 16:04
  SPEAKER_01: Now, don't get me wrong, bonuses are awesome.
• 16:07
  SPEAKER_01: If you can get a bonus, go for it.
• 16:09
  SPEAKER_01: But that does not replace your raise.
• 16:14
  SPEAKER_01: Your raise needs to be separate from your bonuses.
• 16:18
  SPEAKER_01: If you just get bonuses, you're actually moving backwards every year because that cost of living goes up and you don't match it.
• 16:27
  SPEAKER_01: So a bonus really is there for a couple of reasons.
• 16:33
  SPEAKER_01: First of all, just a hey, thanks for doing a great job.
• 16:37
  SPEAKER_01: And the other thing is there are times when you're gonna reach the top of your bracket.
• 16:43
  SPEAKER_01: Maybe you are um, let's just say you're a software developer entry-level, and the company says, hey, the pay bracket for a software developer is from$50,000 to$70,000 for the entry-level developers.
• 16:58
  SPEAKER_01: Well, if you're still an entry-level developer and you're making$65,000 a year, there's not a lot of wiggle room there.
• 17:05
  SPEAKER_01: Yes, you do cost a living for sure, but maybe you don't go beyond that because you're getting pretty close to the top of your bracket.
• 17:14
  SPEAKER_01: So, in that case, a bonus can help you out and be a thank you until you are ready to move to that next level up the tier.
• 17:24
  SPEAKER_01: Okay, so that's where bonuses can be a benefit, but at the same time, they're not the same thing as a raise.
• 17:33
  SPEAKER_01: All right, so let's talk about what I try to do.
• 17:38
  SPEAKER_01: Now, this is not, you know, Tim's awesome.
• 17:42
  SPEAKER_01: Um, but what this is, is I I do try to model what I want to see in companies.
• 17:48
  SPEAKER_01: And the what I want to see in companies is, you know, we can do better.
• 17:53
  SPEAKER_01: And if we see employees as assets, not as just cost syncs, then we should treat them differently.
• 18:01
  SPEAKER_01: So for me, uh, what I do is I do have rough pay ranges based upon positions, and I tend to give out a five to ten percent raise based upon where you are in that pay range.
• 18:16
  SPEAKER_01: So if you're near the low end of the bracket, then you get more of an eight to ten percent raise.
• 18:22
  SPEAKER_01: Whereas if you're near the high end, you get more like a five percent raise um annually.
• 18:27
  SPEAKER_01: So I give raises based upon the the anniversary of when you were hired.
• 18:33
  SPEAKER_01: Now, uh the other thing I do, just so you know, is I don't base your raise off of a conversation over what you did good and what you did bad.
• 18:44
  SPEAKER_01: So we don't do that conversation at the same time.
• 18:47
  SPEAKER_01: If you're struggling with something, I talk to you right away rather than waiting for an annual review.
• 18:53
  SPEAKER_01: I don't like annual reviews because they just they cause stress and they don't add a whole lot of value.
• 18:58
  SPEAKER_01: I don't want to spend my time thinking about what did you do wrong over the past year?
• 19:03
  SPEAKER_01: That's not a great place to be.
• 19:06
  SPEAKER_01: So raises really shouldn't be tied to that.
• 19:08
  SPEAKER_01: You should have a conversation before that, um, before that case.
• 19:12
  SPEAKER_01: And if you do come to the point where, hey, you know what?
• 19:15
  SPEAKER_01: You're you're you're struggling.
• 19:17
  SPEAKER_01: Um, maybe you're not doing great.
• 19:20
  SPEAKER_01: Cost of living should still be there.
• 19:22
  SPEAKER_01: You should still get a cost of living raise.
• 19:24
  SPEAKER_01: Maybe you don't get the five to ten percent raise, but you still get cost of living raise because you're still an employee, you're still a person, you're still gonna at least tread water where you're at.
• 19:36
  SPEAKER_01: But maybe that's all you can do is tread water where you're at.
• 19:40
  SPEAKER_01: Because that's all you're producing, that's all the value you're adding to the company.
• 19:45
  SPEAKER_01: You're not progressing as an employee.
• 19:48
  SPEAKER_01: Now, I also offer semi-random bonuses about two to three times a year, and I tend to hit in the one to two percent of your salary as as a bonus.
• 19:58
  SPEAKER_01: Um, that's about the range I give.
• 20:00
  SPEAKER_01: Um, I'm not pretty exact on that, but um, it's based more upon hey, the company has done well because of your contributions, or in general, the company has done well, and I want to thank you for that.
• 20:12
  SPEAKER_01: But I do it semi-randomly.
• 20:13
  SPEAKER_01: And the reason why is because I do not want my employees to ever feel like that's part of their salary.
• 20:20
  SPEAKER_01: Because when you feel like it's part of your salary, then when it doesn't happen, you are short that month or you're short that year.
• 20:29
  SPEAKER_01: You know, so if if you always expect a Christmas bonus, um then you start buying stuff for Christmas based upon your Christmas bonus when it doesn't come, or you get that Jilly of the month club, um, then you're really up a creek and frustrated, and um that's not a good thing.
• 20:46
  SPEAKER_01: So instead, if it's random, you know what?
• 20:49
  SPEAKER_01: If a thousand dollars shows up extra in your paycheck one week, that's awesome.
• 20:53
  SPEAKER_01: You know, that's just free money and it feels different.
• 20:57
  SPEAKER_01: So those are the things I try and do.
• 21:00
  SPEAKER_01: And if you can find companies that do that kind of thing where they value their employees, where they do that kind of um, you know, five or ten percent raise range, and then bonuses as well, potentially, you know, that's the kind of place that I wanted to work that I've enjoyed working at, and where I didn't concentrate so much on how much money am I making?
• 21:22
  SPEAKER_01: Am I making enough?
• 21:24
  SPEAKER_01: And should I switch jobs?
• 21:26
  SPEAKER_01: Because I feel like that just takes the pressure off the money conversation.
• 21:31
  SPEAKER_01: Sure, you always want to make more money and maybe there's a great job out there, but at the same time, if you have that consistent, yes, I value as a person, then I feel like it's a better situation where you can take that stress off of you.
• 21:46
  SPEAKER_01: So as a person looking for a job or looking to switch jobs, look at how pay range, how pay raises are done, how bonuses are done, and see how employees are treated.
• 22:00
  SPEAKER_01: If they're treated like a commodity, like a cost sink for the business, you're not gonna be happy the raise is there, probably.
• 22:09
  SPEAKER_01: You probably happy how you're treated there in general.
• 22:12
  SPEAKER_01: And if that's the case, then maybe you look for a different place to work if you can.
• 22:17
  SPEAKER_01: Again, if you can't, you can't.
• 22:19
  SPEAKER_01: And then you do the let's switch jobs every year or two or every year, three years to get the raise that I am worth that I'm not getting at my current job.
• 22:30
  SPEAKER_01: Okay, so that's where I land on what's happening in the industry, what you should expect, what I expect from my employees, and um what you should think about raises and bonuses as a software developer.
• 22:45
  SPEAKER_01: Thanks for listening to this week's episode of Dev Questions.
• 22:48
  SPEAKER_01: If you have a question about being a developer, check out the previous episodes either on the podcast or on the YouTube channel under the Dev Questions playlist.
• 22:57
  SPEAKER_01: Have a great day, and as always, I am Tim Corey.
• 23:01
  SPEAKER_00: Thank you for joining us for this episode of Dev Questions.
• 23:04
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• 23:07
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• 23:15
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• 23:20
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• 23:27
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