I have worked for my current employer for 12 years. Let that sink in for a minute. Before my current employer, I worked in another industry for 5 years. Before that, I did a brief year stint while in college in yet another industry. I’m no stranger to changing companies or jobs, so why have I stuck around so long. Should you use job hopping to Increase your pay?
Do Job Hoppers or Those Who Stay Get Paid More?
It’s a common cliche, to make more money change jobs and companies regularly. Sometimes it’s even statistically true. The payroll company ADP releases a quarterly report analyzing pay trends from its massive number of clients. One of the stats they track is whether job hoppers or job holders have higher pay growth. The thing is the answer changes depending on what is going on in the economy.
Back in 2015, the wage growth for staying put was 4.5% on average as opposed to 3.9% for those that changed jobs. In 2017, though the results reversed, with job switchers doing better. In 2018, we’re sitting near parity. The latest quarterly data can be found here. Interestingly enough job switchers are currently beating job holders 5.6% to 4.8%.
Market Situation Determines Statistical Pay Outcomes for Job Choices
The key differentiator seems to be the market situation. In a tight labor market, employers try to keep ahold of their key workers, so they pay more to stay put. After all, it costs more to find the right new employee then it does to take a chance on hopefully hiring the right new person. So if the risk of people leaving is high due to the number of open job openings being high, companies on aggregate will likely pay more to have people stay put. Conversely, if there are more applicants then jobs the risk of losing an employee is lower and the barrier to attracting a new hire is greater. Thus switching jobs pays more. So timing plays a role at the statistical level.
Individual Job Choices are Individual: A Fragmented Labor Market
But what about the individual level? Here is the thing, the labor market is still a highly fragmented thing. Even with an increased rate of education and locational independence, most jobs require the right people with the right skills in the right place. This means even at an individual level the decisions to change employers from a financial perspective really depends on your specific situation.
Job Decisions are Not Purely a Pay Decision
The thing is changing employers is also not purely a money question. So even if you can get paid more by switching jobs doing so might not be your best move. I’ve worked at my current employer for eleven years. Could I have made more switching jobs? Maybe. I’ve done pretty well moving around my current employer as well, more than doubling my pay over those 12 years. Then again I’ve changed jobs internally 6 times now over those 12 years, so it’s not like I’ve sat in one place.
The Tangible Benefits of Staying at an Employer
By staying for 12 years though I’ve also gained some upside I would otherwise have forgone if I left for greener <sic> pastures. Most major employers have sliding scales for things like severance pay and vacation based on years of employment. My employer is one of them. I have 7 more days of vacation than a new hire, and likely more than I’d have elsewhere. I also get a significant severance package and golden parachute should anything go wrong. This would likely be much smaller if I went elsewhere.
The Intangible Benefits of Not Job Hopping
But the benefits of staying put go deeper. Frankly, I like the culture of the company I work for. I know it well, the written rules and the unwritten ones. Who to go to with questions and who to avoid. All these things are learned knowledge. Honestly, they make my current job infinitely easier. Whereas a new hire would have to stumble around for perhaps weeks on end to find the right people, answer, or process, I pick up the phone and in seconds solve issues. This efficiency allows me to be more productive, and at least in my current company, maintain some semblance of work-life balance. This relationships also help when it’s time to change positions for a new challenge. People know you and are more likely to offer you opportunities.
Add to that seniority still plays some part in pay raises, job stability, and even job opportunities. Let’s face it, a company tends to reward those that stick around. Job hopping may provide a momentary boost, but in a downturn it also might mean you are the first layoff since you just walked in the door. Frankly, at the peak of a market I’d actually be less inclined to switch companies for this reason.
The Risk of Company Change
When you change jobs you are taking a chance with a company. It’s like going on a blind date. At best you might be able to google your dates name and find out they are not a serial killer and don’t look like cousin IT. But everything else you don’t truly find out until you’ve worked somewhere for a few months. In some ways that challenge can be welcoming and really help your career, but it’s not always the right move. It highly depends on what you want, the job opportunities, and yes as we started with this post the pay.
Don’t Job Hop for Peanuts
If you are having issues with your current employer or a new opportunity somewhere else appears to better fit your needs, don’t hesitate to pull the trigger. But don’t be the person who just jumps from company to company for 500 extra dollars a year. It’s a road to nowhere and might end up hurting your future employment options if you are viewed as job hopping.
How long have you worked at your current employer? Do you job hop or stay put?