Thanks for all of the suggestions thus far. I think a lot of the trouble for me boils down to:
- I am overly loyal
- The market is small for my type of work, especially near me, so I feel I need to take what I can get
- I am very aware of the financials of our business, and most excess money is being earmarked for growing/hiring new people
- I enjoy the non-tangible benefits of a relaxed workplace, with a culture of work/life balance (I *rarely* need to work more than 40 hours/week)
- I am terrible at negotiating (trying to practice!)
I would love for my boss to think that I might actually be looking around for something different, because that would add motivation and urgency to keeping me around: it might help spotlight how valuable I am. I can't think of a tactful way to actually make this clear, so I guess it's going to be an uncomfortable conversation during my review, "I'd love for you to reconsider my raise, because company X has recently offered me, $XX" - It's a bluff, unless I am actually willing to go for the new job, and I am not sure I can pull off this bluff!
My boss and I share a general disdain and uncomfortableness with office politics/salary games, but I guess that doesn't mean we don't have to play them. I've hinted in the past that it'd be awesome for us to switch to a transparent salary model, but that didn't get any traction.
There is some pressure from owners to maintain/increase profitability, and this is both my best piece of leverage, as well as my biggest hurdle. It's leverage, because I help tremendously with keeping us profitable, but it's a hurdle because the justification for why they can't pay more is likely going to be not
enough profits.
In the end, I don't want to piss off my boss, but I do want to feel that I am getting paid fairly. I will pursue the interview, because it is one of a few *very* rare chances I've had to apply for job similar to mine within 50 miles; I can't help do it, just to learn what's out there. I know the potential employer has already read my cover letter and application (I can see them visiting my website today), so I expect they may call me Monday!
Sometimes I wish I were in corporate-land, where this political salary game is easier, more expected, and a regular part of the job.