What Is a Pay Raise?
A pay raise is an increase in an employee's wage or salary. It is usually expressed as a percentage of the previous pay. The raise percentage is (new pay − old pay) ÷ old pay × 100, and the new pay after a percentage raise is old pay × (1 + raise %).
Example
A raise from 50,000 to 53,000 is a 6% raise. A 4% raise on 50,000 brings pay to 52,000.
Nominal vs. Real Raise
A raise increases purchasing power only if it is higher than inflation over the same period. A 4% raise with 3% inflation is roughly a 1% real raise.
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.