📖 Overview
Use this upgraded calculator to measure whether a raise increases real purchasing power.
⚙️ How It Works
This compares nominal pay increase with inflation-adjusted purchasing power over the selected period.
The Formula
Real Value = Nominal Value ÷ (1 + Inflation Rate)ⁿ | Real Change % = (Real New ÷ Real Old − 1) × 100
| Nominal Value | The stated dollar amount before adjusting for inflation |
| Inflation Rate | Annual inflation rate as a decimal |
| Real Change | Inflation-adjusted change in purchasing power |
💡When inflation runs at 4%, a 3% salary increase is actually a 1% real pay cut. Always evaluate raises in real (inflation-adjusted) terms, not just nominal percentages.
Quick Reference
| Nominal Raise | 2% inflation | 4% inflation | 6% inflation | 8% inflation |
|---|---|---|---|---|
| 3% | +1.0% real | −1.0% real | −2.8% real | −4.6% real |
| 5% | +2.9% real | +1.0% real | −0.9% real | −2.8% real |
| 8% | +5.9% real | +3.8% real | +1.9% real | +0.0% real |
| 10% | + 7.8% real | +5.8% real | +3.8% real | +1.9% real |
Practical Tips
💡 Use current inflation expectations for decision quality.
💡 Check both nominal and real outcomes before accepting offers.
Frequently Asked Questions
❓ Why can a raise still be a real pay cut?
If inflation outpaces salary growth, purchasing power falls.
❓ Should I use one-year or multi-year inflation?
Match horizon to how long the compensation change is expected to last.