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It’s official: the grass is greener on the other side. This is an era when workers’ time at companies is unprecedentedly short, and the job-hopping approach is being vindicated: Nearly half of workers who changed jobs last year were rewarded with a pay raise that not only exceeded their former salary, but the inflation rate. No less an authority than the central bank says it’s true.
Job-hopping beat inflation for 49% of job-switchers in 2022, according to a new Federal Reserve Bank of Atlanta analysis. Among those who stayed loyal to their companies, only 42% got inflation-beating raises. The data comes from the Atlanta Fed’s Wage Growth Tracker, which tracks median changes in hourly pay, year-over-year. Based on the Fed’s findings, workers should maybe consider how green their grass is.
A skyrocketing cost of living, spurred by 40-year high inflation rates, caused many workers’ “real wages,” or their income with the rate of inflation factored in, to fall last year. The Fed’s data shows this is clearly not the case for those who joined the Great Resignation—or even for some of those who stayed behind.
The Fed found that alongside job switchers, younger workers had a better chance of maintaining a salary on pace with inflation.
Real wages grew last year for 38% of employees aged 55 and older—a 15% drop from 2019. Yet, 60% of Gen Z workers (aged 16 through 24) got an above-inflation raise last year. Across the board, the odds of getting a raise are better if you ask for one; some experts even encourage reopening a salary conversation every six months.
The data aligns with a September 2022 ADP report which found, through analysis of payroll data, that the median job switcher last year nabbed a 16.1% raise—almost double the raise that “loyal” workers got.
As a result, workers’ newfound bargaining power led to a domino effect: bosses who fell victim to the Great Resignation last year and wound up understaffed were likely to grant pay bumps and keep their talent around or offer significant salaries to applicants in hopes of filling their many open roles. That kept inflation running hot for much of the year, with companies upping prices to offset these heightened labor costs.
Over the last six months, though, inflation has been cooling as the Great Resignation seems to wind down, but enough people are still on the job-hopping train to keep it at above-average levels. “Wages do not appear to be driving inflation in a 1970s-style wage–price spiral,” Fed Vice Chair Lael Brainard said last month, adding that he sees “tentative signs that wage growth is moderating.” (President Biden named Brainard his top economic advisor at the National Economic Council earlier this week).
Keep your eyes peeled
Even though the job switchers came out on the top of the pile, the bigger picture remained pretty grim. The total share of workers whose real wage grew in 2022 was 12% lower than in 2019, proving inflation has done a number on workers’ paychecks across the board.
That might suggest that no matter where you go, a job could wind up falling short of expectations, at least salarywise. For many workers, that’s meant picking up an entire second job to make ends meet—experts call this overemployment. But think twice about two-timing your employer; career coaches say you’re better off continuing to job hunt until you land somewhere you believe you’ll really love it.
“There’s a lot more understanding that you might have left because your employer was mishandling the pandemic or because they’re stuck in outdated practices around remote work,” career expert Alison Green told Fortune of job-hopping last year. “There’s so much churn going on right now—and so much power on the workers’ side that hasn’t been there traditionally—that [prospective] employers are much more willing to overlook short stays than they might have been previously.”
All the more reason to start applying if you get the sense your current pay isn’t matching your worth. As Vivian Tu, the equities trader turned TikToker known as Your Rich BFF, put it, job hopping could be the best financial move you make this year.
“It’s a lot easier to job hop every two years and get a 25% raise, and then have that additional $10,000 when it’s in your salary, than it is to try and get there by cutting out every penny off of your Netflix subscription, off of that avocado toast, or that Starbucks,” she said.
At a new, higher-paying job, she told Fortune, “you’re just going to have a better life.”
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