Changing jobs may not yield the big pay boost that it once did, The Wall Street Journal reported.
As the job market cools, so does the quits rate, which measures how many people voluntarily leave employment. That rate fell to 2.6 percent in February, down from its 2021 high of 3.0 percent, according to the Bureau of Labor Statistics (BLS). This suggests that employers don’t need to offer as big a premium to hire or keep workers, John Robertson, senior policy adviser and economist at the Federal Reserve Bank of Atlanta, told the Journal.
The average raise for job switchers was 8.4 percent raise in August 2022, compared with a 5.6 percent increase for those who remained in their jobs. In March 2023, the raise was 7.3 percent for job switchers, and 5.9 percent for those who remained on the job, according to the Atlanta Fed.
In addition, companies that offered large pay increases last year for new hires may face resentment from existing employees. “It’s not just the level of compensation that makes people really upset,” Stephan Meier, a Columbia University business professor, told the Journal. “It’s the inequality within the organization.”
Employers added 236,000 jobs in March 2023, the U.S. Department of Labor reported, but economic growth has slowed, causing workers to value job stability in the face of a potential recession.
“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,” said John Robertson, a senior policy adviser and economist at the Atlanta Fed.
Matt Schulman, a 31-year-old communications director, changed jobs in late 2021 for a 30 percent raise. But in March 2023, he had some misgivings when presented with a new opportunity with an increase that would not be as large as his last one. He and his wife are expecting their first child and are looking for a house in the New Jersey suburbs.
“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 told the Journal. He ultimate decided to take the job, despite his misgivings, because it came with a more prestigious title, increased responsibility and the potential for future bonuses.
“Any time you go somewhere else, there are more unknowns," he told the Journal. But I decided it was worth the chance.”