Talent   //   October 10, 2023

A six-figure salary was once celebrated, now it’s expected

Hitting a six-figure salary used to be a career milestone for many. Making $100,000 or more was something to celebrate over dinner and drinks. 

Today that celebration isn’t quite as big. Minimum salary requirements are changing for a lot of people as they deal with rising costs of living and inflation. For example, Ladders, a career site for jobs that pay $100,000 or more annually, found that due to inflation, that number is now equal to about $165,000.

“When the term six figures started being used, that was really a substantial amount of money,” said Marc Cenedella, CEO at Ladders. “But inflation marches on.”

Even high earners are struggling. Data from a recent survey conducted by personal finance software company Quicken revealed that 32% of Americans earning at least $150,000 a year are currently living paycheck to paycheck, while 36% of folks earning $50,000 to $150,000 and 55% of households earning less than that reported the same.

“These consumers, even getting paid over $100,000 a year, are feeling cautious about their financial lives,” said Eric Dunn, CEO of Quicken. “Now they are feeling the economy is uncertain and interest rates are making debt more expensive. Everyone is paying more for gasoline and airfare than three years ago.”

Jeff Rose, certified financial planner and founder of GoodFinancialCents.com, says that what you could buy for $100,000 in 2013 would require approximately $120,000 today.

“The excitement of earning six figures has been overshadowed by the reality of rising living costs,” said Rose. “For example, average home prices have surged by around 26% in the past three years alone, making homeownership a distant dream for many.”

Simon Litt, finance expert at finance leadership association the CFO Club, agrees. “The economics have radically changed, yet the goalposts have stayed the same,” he said.

“The economics have radically changed, yet the goalposts have stayed the same.”
Simon Litt, finance expert at the CFO Club.

Additionally, the amount of money most workers want when they accept a job reached a record high this year, another sign that inflation is alive and well in the labor market. According to the latest New York Federal Reserve employment survey, the average “reservation wage,” or the minimum acceptable salary offer to switch jobs, rose to $78,645 between April and June this year. That’s an 8% increase from just a year ago and the highest level ever in the data series that goes back to 2014. 

Are employers providing raises to keep up with inflation? Not always. But is it up to them to “solve” this issue? Experts say not necessarily, but they can put things in place like scheduled annual wage reviews and financial planning benefits. And when that’s not feasible, they could look closer at total rewards and other benefits like help with student loans, first-time home buying, and allowing flexible work to save on things like commuting and childcare. 

“I think we need more education starting at earlier ages about personal savings and finance,” said Emily Goligoski, head of research and senior vp at media and workplace insights company Charter. “I think employers making this available is critically important. It’s having well-vetted financial planning available to all, not just executives.”

Employers can also ensure that they are being inclusive with their benefits. Telling everyone to sign up for a 401k might not actually make sense, especially if people are also trying to pay off student or medical debt, for example. 

Dan Egan, vp of behavioral finance and investing at financial advice firm Betterment, said it’s also helpful for workers to reframe how they look at their total compensation. 

“You lose track of the 50 to 60 hours a week of work to make little numbers on a page change. Is that actually worth it if you no longer have time to spend with your kids?"
Dan Egan, vp of behavioral finance and investing at Betterment.

“You lose track of the 50 to 60 hours a week of work to make little numbers on a page change,” said Egan. “Is that actually worth it if you no longer have time to spend with your kids? Money is only meaningful if you’re converting some part of your life to be better. Don’t get stuck in a rat race of having your salary be a scorecard for how well you’re doing.”

Easier said than done. Goligoski said the pressure to keep up is “real and more pronounced“ than ever before. “There is a real influencer impact because we all see the way others live and pretend to live on social media,” said Goligoski. “There is a performative aspect to modern spending,” she added.

In some cases, more money is helpful, but in others, it could be flexibility that has a bigger impact for the individual. It’s easy to underestimate the value of non-money compensation and most people forget to negotiate other perks as well, but it’s not to be overlooked. 

“You can say inflation is at 5% and I only got a 2% raise, but how about in the month of August I get Friday afternoons off,” said Egan. “It’s smart to negotiate for things other than salary to make your life better.”

So what does the new aspirational number become if not $100,000? “I don’t think $200k will be the new $100k,” said Egan. “It’s good to not have arbitrary benchmarks but to make decisions for our own lives.”

But Goligoski wishes there was a more straightforward answer. “It’s so different based on educational level, what your family members urged you to ask for and so on,” she said. “It’s a tricky one. It comes back to how we’re not necessarily preparing people who are entering jobs to be able to negotiate for themselves and to know their value.”