How to Calculate Annual Rate of Growth of Salary Increase

by Michael Keenan

When you get a long-awaited raise, your first emotion might be excitement. However, if it's been a while, the percentage annual growth of your salary might make you feel like you deserved a bigger raise. If you know the annual rate of your salary increase, you can make a stronger argument for getting a bigger raise. To figure the average annual raise, you need to know your old salary, your new salary and the time it took to get your raise.

Step 1

Divide your increased salary by your previous salary. For example, if your salary used to be $41,000 and it increased to $46,000, divide $46,000 by $41,000 to get 1.12195122.

Step 2

Divide 1 by the number of years it took to earn the salary increase. For example, if you earned the salary increase after four years, divide 1 by 4 to get 0.25.

Step 3

Calculate the Step 1 result raised to the power of the Step 2 result. Using a calculator, enter the Step 1 result, push the exponent key, enter the Step 2 result and push enter. In this example, raise 1.12195122 to the 0.25th power to get 1.029185109.

Step 4

Subtract 1 from the result to find the annual rate of growth of your salary increase. In this example, subtract 1 from 1.029185109 to get 0.029185109. This means the salary increased by 2.92 percent per year.

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