More salary – that sounds like a clear win at first. But anyone who has ever received a raise may know the sobering feeling: the extra money in the account remains manageable, and sometimes you wonder whether the extra effort was even worth it.
Gross up, net too
If the salary increases, the net income automatically increases. Although the state intervenes more heavily through taxes and social security contributions, a decrease in the payment amount is legally impossible. Even with progressive tax rates, there is always a little more left over, even if it may be less than you hoped for. This is exactly what calculations used by the German Press Agency confirm: A salary increase never leads to less money in your wallet, it is just sometimes more modest than expected. The idea that you will end up earning less after a wage increase is simply wrong. Rather, it is a distortion of perception that arises from disappointed expectations.
Why less sometimes feels like a step backwards
If your gross salary increases, you automatically expect a big plus in your account. However, if the net profit falls short of these expectations, the thought quickly arises that you might even have less than before. That is exactly the problem: the increase is real, but subjectively it is perceived as too small. The result is frustration and a myth that persists.
Economic benefit also on the employer side
A higher salary is not just an incentive for employees. Companies can also benefit. Those who pay well often have more loyal and motivated employees. This is not just a gut feeling, but also proven by economic theory. The so-called efficiency wage theory states that higher wages can increase productivity. Employers who pay above average secure competitive advantages because they reduce fluctuation and absenteeism, according to Belonio.de.
Less taxes, more effect
If you want to get the full benefit of a salary increase, you shouldn’t just look at the gross amount. Because there are alternatives that are often cheaper from a tax perspective. Subsidies for commuting, meal vouchers, relaxation allowances or contributions to company pension schemes are among the options that companies can use to provide targeted relief to their employees. These additional benefits have a direct impact on the net – and, as Handwerksblatt.de reports, are often more noticeable than a small gross wage increase.
Editorial team finanzen.net