Job seekers had the leverage to demand bigger pay raises during last year’s red-hot job market, as companies competed to attract and retain talent. Switching jobs might still earn workers a raise, just a smaller one. Some workers worry they have missed the window to capitalize on the leverage employees once had over employers, while others are choosing to prioritize stability as employers gear up for an economic slowdown.
The typical job switcher earned an 8.4% raise in August 2022, compared with a 5.6% increase for remaining on the job, according to data from the Federal Reserve Bank of Atlanta. In March 2023, job switchers’ wage growth fell to 7.3%, while those who stayed with employers received a 5.9% increase.
As the market shifts, fewer workers are dashing for the exits. The quits rate, which measures how many people voluntarily leave employment, fell to 2.6% in February, down from its 2021 high of 3.0%, according to the Bureau of Labor Statistics. This suggests employers don’t need to offer as big a premium to hire or keep workers, said John Robertson, senior policy adviser and economist at the Atlanta Fed.
Some workers looking to leave for a more lucrative position now say they regret not making a move sooner. Connor Baizan, a 30-year-old quality engineer, turned down offers with big raises from recruiters in 2022, so he could focus on planning his wedding. This year, when he kicked off a job search so he and his wife could relocate from Knoxville, Tenn., to Chicago, he found the salaries less enticing.
Mr. Baizan talked to recruiters and paged through listings, but nothing matched the massive salary bumps other employers had dangled a year ago.
“I saw a lot of jobs with similar levels of compensation to what I was making in Knoxville, which was a decent level of money, but not when I’m going from a low-cost-of-living area to a high-cost-of-living area,” he said.
He ultimately took a new job, one that came with a 20% raise. He said he loves both the work and the opportunity to be in the Chicago area, but after adjusting to living in a more expensive area, the pay bump feels smaller than expected.
Companies that offered huge pay bumps last year for new hires may be facing tensions internally. Some highly-paid workers claim they were hired to merely “do nothing,” and in other industries, executives found it more expensive to boost their staff count and recruit new talent.
“It’s not just the level of compensation that makes people really upset,” said Stephan Meier, professor of business at Columbia University. “It’s the inequality within the organization.”
The labor market remains strong. Despite rising rates, a volatile market and persistent fears of a recession, employers added 236,000 jobs in March 2023 according to the Labor Department.
In these economic conditions, workers are adding job stability high on the list of pros and cons of whether making a move is worth it.
“If you’re a new hire, there’s a chance that you’ll be the first to be let go, so you don’t necessarily want to change jobs in that environment,” Mr. Robertson said.
Then there are those who are tired of changing jobs, even if there’s a big raise.
Matt Schulman, a 31-year-old communications director, changed jobs in late 2021, and then again in March 2023. He made the first move primarily because he was offered a 30% raise, one he said finally helped him feel caught up to his peers.
But in 2023, when a new opportunity arose at a different firm, the decision of whether or not to take the job came with many more concerns. Mr. Schulman and his wife are expecting their first child, and they were also house hunting for a bigger place in the New Jersey suburbs. The new role offered an increase in pay, but not as big as the huge jump he saw when he last switched jobs.
“There are a lot of changes happening in my life, so I thought: ‘Oh, God, do I really want a third major change in conjunction with this stuff?’” he said.
He took the job anyway, since the new role also came with a more prestigious title, greater responsibility and the possibility of future bonuses.
“Any time you go somewhere else, there are more unknowns. But I decided it was worth the chance,” he said.
