Switching jobs wont get workers quite the pay bump it did last yearbut thats not stopping many from looking for a new gig, anyway.
Taking a job at a new firm has long been considered the best way to get a substantive raiseand it does still come with a larger pay bump than what job stayers are receiving, according to the Federal Reserve Bank of Atlanta. But the premium has fallen since last year, when companies fighting to attract workers in a tight labor market pushed wage growth for new hires to heights not seen in decades.
In March 2023, the typical worker who got a new job saw a 7.3% pay bump, compared to 5.9% for those who stayed put. Februarys wage growth was even smaller, at 6.7%. Compare that to July and August 2022, when typical job switchers received 8.5% and 8.4% raises, respectively, and those who stayed saw 5.9% and 5.6% bumps.
The job market has shifted significantly in the last six monthsthe power has somewhat shifted back to the employer, says Paula Mathias-Fryer, senior director at SLO Partners, an economic development initiative in California. However, there is still an opportunity to increase wages by changing jobs.
In fact, job switchers are still netting higher raises than they were this time one year ago, meaning it doesnt hurt to look around. But job hoppers likely missed the wage growth apex, according to the Feds data, at least for now. In 2019, for example, wage growth for job switchers ranged between 3.9% to 4.5%.
Despite layoffs at high profile companies in the tech and finance sectors that have shaken some workers confidence in finding a new role, the labor market remains strong. And slightly less generous raises for job seekers dont seem to be swaying many from looking: While the quit rateor how many people voluntarily leave their jobshas dropped compared to a year ago, it remains above pre-pandemic levels.
Still, job seekers may want to be careful amid a slowing economy and recession fears. Job openings fell to the lowest level in nearly two years in March, while layoffs rose, according to the U.S. Labor Department.
Those securing new roles now could be at risk of a last one in, first one out scenario, should the economic landscape change, says Mathias-Fryer.
That said, three-quarters of workers are planning to look for a new job in the next year, according to a recent report from career development site The Muse. Thats up from just 65% in 2022, even as the so-called Great Resignation captures fewer headlines and economic uncertainty abounds.
What has changed is the types of jobs workers are looking for, says Sara Madera, a career coach in New York City.
Previously the conversations were centered around each individuals passions, growth, and preference for work-for-home, says Madera. Now there is a sense of practicality and wanting to ensure that a job switch will be secure and not end in a layoff.
