Comment by Aurornis
3 days ago
The phrase “cost of living increase” is used to refer to an annual salary increase designed to keep up with inflation.
Typically, you should be receiving at least an annual cost of living increase each year. This is standard practice for every company I’ve ever worked for and it’s a common practice across the industry. Getting a true raise is the amount above and beyond the annual cost of living increase.
If your company has been keeping your salary fixed during this time of inflation, then you are correct that you are losing earning power. I would strongly recommend you hit the job market if that’s the case because the rest of the world has moved on.
In some of the lower wage brackets (not us tech people) the increase in wages has actually outpaced inflation.
Thank you for your concern but I'm in Germany so the situation is a bit different and only very few companies have been able to keep up with inflation around here. I've seen at least a few adjustments but would not likely find a job that pays as well as mine does 100% remote. Making roughly 60K in Germany as a single in his 30s isn't exactly painful.
> but would not likely find a job that pays as well as mine does 100% remote.
That makes sense. The market for remote jobs has been shrinking while more people are competing for the smaller number of remote jobs. In office comes with a premium now and remote is a high competition space.
If you want to work 100% remote you could consider working for a US company as a consultant?
If a US company hires you in Germany, either you get hired by their German branch or a personnel service provider based in Germany; and thus get paid "competitive" salaries typical of the country. Or you need to have some kind of setup where you are a freelancer or such and you figure out the taxation and statutory insurances and such on your own, which I'm not familiar with (my freelance IT consultancy side-business is rather simple because of small scale and only domestic customers). That will probably work, and if you manage to get a senior Silicon Valley salary, you would probably come out ahead by a bit after taxes and insurances. But you would probably need good tax advisors to avoid stepping in expensive loopholes, and if you work more than 80% for a single employer, the tax administration will be on your case because false self-employment is a possible method of tax evasion and has been outlawed.
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Typically "Cost Of Living" increases target roughly inflation. They don't really keep up though, due to taxes.
If you've got a decent tech job in Canada your marginal tax rate will be near 50%. Any new income is taxed at that rate, so that 3% COL raise, is really a 1.5% raise in your purchasing power, which typically makes you worse off.
Until you're at a very comfortable salary, you're better off job hopping to boost your salary. I'm pretty sure all the financial people are well aware they're eroding their employees salaries over time, and are hoping you are not aware.
Tax brackets also shift through time, though less frequently. So if you only get COL increases for 20 years you’re going to be reasonably close to the same after tax income barring significant changes to the tax code.
In the US the bottom tax brackets where 10% under 2020 $19,750 then 12% next bucket, in 2025 it’s 10% under $23,850 then 12% next bracket. https://taxfoundation.org/data/all/federal/historical-income...
And here I am in the UK, where the brackets have been frozen until 2028 (if they don't invent some reason to freeze further).
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