Workers With Leverage
In last year’s tight labor conditions, workers found themselves in a unique position. With demand for talented workers high, they were able to command higher wages, offering their services to the highest bidder.
This competition within the job market also created a “pay raise” gap. In other words, those switching jobs commanded larger pay raises than workers loyal to their companies.
While switching jobs may still lead to salary increases, the magnitude of those raises has recently diminished. For those worried they may have missed the gravy train, the bump for job-switchers remains higher. But the gap is already narrowing — and may not stay open for long.
Loosening Labor Market
According to the Wall Street Journal (NWSA), job-hoppers saw an average pay raise of 8.4% in 2022, compared to the 5.6% increase for those who held onto their job. But the trend has since reversed course, with job-switcher raises falling to 7.3%, and job-holder raises increasing to 5.9%.
At the same time, the stubbornly-tight labor market appears to finally be loosening. Job openings are nearing a two-year low, while quit rates fell from their high of 3% in 2021 to 2.6% in February. With fewer employees looking for the nearest exit, employers might not feel a pressing need to incentivize workers with higher raises. This could be a headwind for that 5.9% increase.
Siding With Stability
As the job market evolves and the benefits of job-hopping dwindles, workers are increasingly prioritizing job stability. This shift in priorities has led to a decrease in the number of employees seeking new opportunities, with some regretting not making a move sooner.
This changing landscape challenges individuals to weigh the pros and cons of job-switching carefully, considering factors such as salary increases, job stability, and personal fulfillment. A decision which might have seemed a financial no-brainer months ago just got more complex.
It’s worth noting these patterns always seem circular. Employees today may not be heading back to the model of staying at a single position for decades, like in generations past. But the recent trend of reckless job-hopping appears to be taking a small step in that direction.
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