My Company Doesn’t “do” Raises, Ever

A reader writes:

I work for a company of about 40 employees that says they “don’t give raises.” It’s in a field that is traditionally freelance, so having a full-time salaried position with benefits while doing this work is slightly unusual, but not unheard of.

When asked, management says explicitly that because of how well we’re compensated, they don’t do raises. The salary range is $80-95K — on the high-ish end for our field but not wildly above what freelancers in our field can earn. The hourly rates of freelancers tend to increase $5 every 2-3 years.

My question is how bananas is this and do you have any suggestions for how we can push back? I was shocked when I heard this line from management about simply “not doing raises” after I was hired. I would have negotiated much harder for my starting salary if I knew there was no chance of it increasing when I’d like to stay here for years.

Incidentally, the no raises thing seems to only be partially true. From lots of chatting with colleagues, it seems many long-time (highly qualified, respected) employees have indeed never received a raise, meaning in many cases newer less qualified employees earn more because they asked for more when they got hired. A very few employees have received raises. Unfortunately, the only two we can identify who received it unprompted were men. Others were very long-time employees who had to really fight for it and go through a lot of back and forth individually with management.

They don’t “do” raises means that they’re actually cutting your pay in real dollars every year, because of inflation.

They’re also saying that you’re no more valuable to them after five years than you were on your first day.

And it’s particularly galling that they don’t warn people that the salary they come in at will be their salary forever.

So yes, it’s bananas. It’s also terrible management.

It’s also quite possibly illegal, if they’re paying men and women differently for the same work because the men negotiated more and the women didn’t. To be illegal, you don’t need to prove that your employer intended to discriminate against women; just the fact that men and women are being paid differently for the same work violates the law.

To push back, make all those points — particularly that you’re being paid less in real dollars now than when you were brought on, despite your experience making you more valuable to them now.

That said, when you’re doing your calculations, make sure you’re accounting for the financial differences between freelancers and employees. Freelancers need to pay their own payroll taxes (and health insurance and other benefits) so typically charge around twice what a salaried employee would charge in order to break even. So if you and your coworkers are earning $80,000 – $95,000, a freelancer earning $5 or even $10 an hour more that than that (so around $90,000 – $116,000) is actually coming away with less after-tax income. That doesn’t mean you shouldn’t still advocate for raises that at a minimum keep up with the cost of living — you should — but don’t lean on the freelancer comparison.

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