If you are lucky enough to work at a company that provides an annual cost of living increase, you should be happy to know that your raise was likely close to inflation.
According to actuarial firm Eckler in their annual compensation survey, the average base salary increase in 2023 was 4.4 per cent, more than the 4.2 annual inflation rate reported by Statistic Canada in 2023. The same survey reports that a 3.9-per-cent base salary increase is projected for 2024.
All those who got an increase even close to the annual inflation rate should see it as a win for that cost of living increase. Many people, however, are feeling that their overall expenses are rising faster than their pay increases. Essentially, the cost-of-living increase is not really helping with the entire increase to their cost of living.
Perhaps it is time we rethink what our cost of living means and what should be expected from employers. Should it be called a cost-of-living increase or simply an increase in base salary.
Costs of living increases are supposed to be about covering the rising costs of basic necessities. This, however, means different things to different people, boiling down to what we need, and what we want.
Yes, we need increases in pay as life gets more expensive each year. It is, however, a two-way street as there should be responsibility on both sides of the equation. Never before has there been more choice and easier access to goods and services – from numerous streaming services to subscribe to, to online shopping and delivery for pretty much anything.
What we expect to be regular expenses became apparent when my financial planner sent a budget template to help plan my personal finances for 2024. The regular areas such as mortgage, groceries, gas, clothing, entertainment and cell phone, as expected, were line items. Other line items were things such as food delivery services, miscellaneous Amazon purchases and spa services (haircuts were a different item).
Not only has our cost of living increased, but what we feel we need in our lives to maintain a good living has increased. Much of this cost, is simply choice and money buys choice. It is natural to feel that your cost of living increase did not come close to your cost of living, when there is so much choice, and it gets tougher to resist.
As a Gen Xer, growing up in the 1970s and 80s, dining out was a treat and privilege, not a convenience and certainly not an expectation. And vacations, I can count on one hand how many times I flew before I was 20, and with parents as teachers with a good middle-income salary, it is not as if we did not have the means. For many of us, vacations look different now than they did 40 years ago.
Rarely do we hear about a “vacation” that involves something other than family flights and less than two weeks. In fact, employers had difficultly getting employees to take their vacation time during the pandemic because flying was not possible – so it really was not seen as a vacation.
Redefining a cost-of-living increase seems to be needed, both on the part of the employer and employee. For the employer, and those employees fortunate enough to see a pay increase each year, perhaps we can just call it that, a yearly salary increase.
Chances are the basic costs of living (housing, food and clothing) are melded in with other seemingly basic costs (vacations, spa services and delivery food apps).
Yes, if the employer can gauge it based on the Statistics Canada inflation numbers, all the better. But it should not be expected.
For employees, as much as we are tempted to want and have everything, most of us simply cannot and need to rethink what cost of living means, and what ‘nice to have in my life’ means as well.
As I sit in my home in Calgary experiencing cabin fever for the fourth day of nothing higher than -35 outside, it would be so easy to head onto my favourite online shopping sites or order food from a delivery app. Or I can do what I did 40 years ago growing up in Winnipeg – watch TV, read a book and eat popcorn I made at home.
Eileen Dooley is a talent and leadership development specialist, and a leadership coach, based in Calgary