Wage Growth & the Job-Hopping Trend
Job-hopping, typically defined as switching jobs every two years or less, has become a popular trend within the current employment climate. In April, 3.5 million Americans quit their jobs. [1] A strong economy and low unemployment rate (3.6%) increase the confidence of those in the workforce to look elsewhere for employment. Per Andrew Chamberlain, chief economist at Glassdoor, “The high rate of workers voluntarily quitting their job is actually a healthy indicator. It’s a powerful signal that workers are feeling bullish about the economy today.” [2] About a quarter of U.S. employees are on the hunt for their next new opportunity, whereas the global average is 27%. [3]
On the Positive Side
For many, accepting a role with a new company can equal an increased paycheck. Most workers, 64%, look upon this trend favorably, which is up 22% from four years ago. Employees are doing the job shuffle as the current employment landscape is one where companies are having a tough time finding the desired talent. Candidates see this as an opportunity to gain a bigger title and earn a higher wage. Where job hopping may have raised a red flag to employers when reviewing resumes in the past, this is no longer the case. Rather than being seen as a sign of instability or lack of loyalty, it is now seen as a sign of adaptability and an interest in investing and growing in their career via developing new skills.
Those in the younger age bracket such as millennials have taken advantage of this in droves with 75% of employees under the age of 34 stating that job-hopping is seen as a benefit to growing their careers. [4] The last time staying with your current employer paid off with higher wage growth than going somewhere else was in 2011. [5]
Wage Growth Comparison
While on the whole wage growth has been sluggish, with real average hourly earnings increasing 1.7% from May 2018 to May 2019 (seasonally adjusted), [6] full-time workers who switch jobs are seeing an average of a 5.6% increase in wages, which is up 1.5% since last year. [7] Those who have stuck with their current job have seen a 4.8% increase, which is a 0% change from last year, though is the strongest growth for this group since September of 2018, signaling that organizations are turning to pay growth in order to retain their existing workforce amidst the current hiring challenges.
However, per a recent report, on average employers are offering candidates a 15% pay increase to join their organization even though employees are only expecting a 10% increase. Per Brian Kropp, group VP within the Gartner HR practice, “Not only are U.S. employers often paying too much to new workers but once tenured employees discover discrepancies between their salaries and those of new colleagues, they may be more inclined to look for another position elsewhere.” Instead of increasing salary offers, companies would be well to create a strong employee value proposition (EVP). The EVP should include benefits, compensation, as well as career and development opportunities. [8]
By the Industry
Foodservice, construction, and retail are just some of the industries feeling the impact of job hopping though for some, staying put means a higher paycheck. Operations managers and administrative assistants earn 21% and 19% more than those newly hired. Nurses don’t really see a benefit either way. Software developers and accountants that job hop earn about 10% more than those that have stuck around. [9] Tech companies are looking at training and personal development to keep employees from jumping ship.
Looking Ahead
We’ll keep an eye on this trend as well as other insights within talent acquisition as we navigate this topsy-turvy recruiting environment.
