Negotiating Salary in Tough Economic Environments

Written By: Jillian Climie.

At The Thoughtful Co, we’ve been hearing a lot of fear around salary negotiations lately. With economic uncertainty in the headlines and layoffs happening in some organizations, it’s natural to feel hesitant. While these realities are important to consider, they shouldn’t stop you from making the ask. 

Below we’ve outlined why it’s still worth negotiating in a tough economy, and how to approach it in a way that positions you for success.

Tough times make strong talent even more essential

When companies are facing economic challenges, they often need to do more with fewer people. This means their best performers become even more valuable, not less. Organizations need high-impact contributors to navigate uncertainty, deliver results, and help set the business up for future growth. Losing those employees can be costly and disruptive. In fact, Gallup estimates that turnover can cost between 50-200% of an employee’s salary. That means retaining top performers is often a priority, especially in difficult times.

When approaching negotiations, it’s important to truly understand your value. Take a moment to think through your key contributions: the initiatives you’ve led, problems you’ve solved, metrics you’ve influenced, and the ripple effects of your work on the broader organization. This reflection isn’t just an exercise; it’s the foundation for a confident and compelling ask.

Don’t assume there’s no budget

It’s easy to see news headlines about layoffs or reduced spending and assume your own company is in the same position. But the truth is, we rarely know the full picture unless we ask. Compensation budgets vary by department, role, and timing. When it comes to negotiation, one rule of thumb at The Thoughtful Co is to never make assumptions. Don’t assume there’s no budget without confirmation. Don’t assume you’ve already reached the top of the pay range without asking. Don’t assume the company can’t make an exception.

If you don’t ask, you’re dramatically reducing your chances of getting what you want. Even in lean environments, it’s worth having the conversation to see what’s possible - you may be surprised by what your employer can offer!

Focus your case on you, not market data or external factors

The most persuasive case for a salary increase is one that’s rooted in your own unique value. What specific results have you delivered that positively impact revenue, cost savings, or other business metrics? How have you contributed to client retention? What role have you played in keeping talent engaged or delivering projects? What unique value do you add? When you frame your ask directly beside these accomplishments, the number you’re requesting is no longer abstract. It’s positioned in clear relation to the measurable impact you’ve made. This approach helps decision-makers see your raise not as an expense, but as an investment in proven results.

We generally caution against relying too heavily on market data in these conversations. Pay practices differ widely between organizations and some companies prioritize certain roles over others. Other organizations may put more compensation into bonuses than base salary. In tough times, market data can also be dismissed quickly with a “that’s not relevant for our company” response.

Similarly, leading with inflation as your main reason for an increase can be counterproductive. Economic factors like inflation impact everyone, not just you. Your company has almost certainly factored broader economic conditions into its budget planning already. Keep your focus on the unique value only you can bring.

Be mindful of timelines

In challenging economic conditions, negotiations can move more slowly. Whereas in stronger markets you might see an increase approved right away, now there may be additional planning, layers of approval, and budget checks involved. Acknowledge that reality with patience, but don’t let the conversation drift away. If you receive a “not right now” response, set a follow-up date. Keep the dialogue active so your request isn’t forgotten in the shuffle of competing priorities.

Collaborate on a forward-looking plan

If your leader tells you budgets are frozen, that’s not the end of the story. Freezes don’t last forever! Ask to work together on a plan for how you can reach your target compensation over the next year.

If the obstacle is budget, can you revisit the discussion next quarter? If the challenge is performance, can you get clarity on exactly what you need to demonstrate to move forward? By turning the negotiation into an ongoing, collaborative conversation rather than a one-time event, you increase your chances of success when the constraints lift.

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Even in uncertain times, we’re still helping our clients achieve remarkable results, from securing large sign-on bonuses to earning promotions with substantial salary increases. Economic challenges don’t erase your value. With preparation and a focus on your unique contributions, you can make a compelling case for the compensation you deserve.

If you’re ready to strengthen your negotiation strategy, reach out to The Thoughtful Co today.