Professional: “Moving Up the Wage Scale by Moving On” – March 4, 2020
Historically low unemployment numbers may be a bright spot in the overall economy, but the sheen is largely dulled when you consider that wage growth has been largely stagnant. For several years, take home pay has languished well behind reported increases in the cost of living throughout the still-in-process recovery from the great recession.
As such, it’s fair to say that just being on the ladder of success is no guarantee of moving up it.
Yet, the story can be very different for wage growth seekers who don’t accept the status quo.
In a recent Wall Street Journal article, Giuseppe Moscarini, a labor economist at Yale University, pointed out that workers in the U.S. who switch jobs earn four percent more than their counterparts. Although the “itch to switch” is understandable in most scenarios, it grows more prevalent when employers lose focus on key areas of concern—things like employee training, work/life balance, and job recognition, among others.
Perhaps even more strikingly, Moscarini reported that 40 percent of wage growth comes when employees move on to greener pastures, rather than build on their experience or skills within their current workplaces. Of course, that stands to reason: workers can only demand higher wages if they can entertain outside offers.
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Traditionally, a resume reflecting a past of job-hopping was thought of negatively, but that stigma has begun to change in substantial ways. The gig-economy and the volatile nature of corporate employment itself have contributed to a recent finding by a 2018 LiveCareer study that revealed the average number of jobs held per worker over five years was 2.3. Just two years prior, in 2016, that average number was 1.3.
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What seems to hold true is that the most productive companies are able to pay more to “poach workers” and expand, while less productive companies shrink. That insight, from Chris Pissarides, a Noble Prize-winning labor economist, suggests that the biggest reason for wage growth is competition, either from actual turnover or the threat of it.
The first step to your next level in salary.
Although switching jobs is often a productive strategy for earning more money, no aggressive job search is risk-free. That said, Andrew Chamberlain, chief economist for the jobs site Glassdoor, suggests that a high rate of workers voluntarily quitting their jobs to pursue more profitable opportunities is actually a healthy indicator for the economy. He cited a Federal Reserve Bank of Atlanta analysis that found people who switched jobs saw their wages rise nearly 4 percent versus 3 percent for others who stayed in the same jobs.
Now more than ever, “It’s a signal that a worker can learn, adapt, and is invested in growing and developing their skills throughout their career,” explained Chamberlain.
Starting from a position of strength.
At Resume Professors, we know there’s a real advantage in being gainfully employed at the negotiating table, but despite it, many still leave a lot of dollars on it. Several years ago, a Forbes article suggested that staying employed at the same company for more than 10 years can, on-average, lower your earnings by 50 percent.
Although no one can predict exactly where their job fortunes will take them in the future, it always makes sense to be fully prepared for the journey in the present. After all, that new resume may not be what got you a current seat in the boardroom, but it might just be what takes you to the corner office.
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