Deciding between staying at your job or changing roles for a higher salary? New federal data shows that the difference in increased pay between those who stay and those who switch has dropped to its lowest level in a decade.
According to a wage growth survey conducted by the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of Atlanta earlier this month, those who stayed in their current roles saw their salaries rise by 4.6% in January and February while job switchers only saw a slightly higher increase over the same period at 4.8%.
The difference between the two groups was wider in January 2023, when workers who stayed in their roles saw wages rise by 5.5% and switchers experienced a 7.7% increase, but the gap has narrowed with time.
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U.S. Labor Department data shows that more Americans are choosing to stay in their jobs, with the quit rate reaching its lowest point in 2024 since 2020. Compared to 2022, when over 50 million Americans quit their jobs, only 39.6 million people quit in 2024.
Workers are holding onto their jobs because they think it would be difficult to find another job that compares — and they don’t think they have as much negotiating power as employers. According to a Harris Poll survey released last week, 70% of Americans think they would have trouble finding a job better than their current one, with three in four respondents saying that employers currently have more leverage in the job market than employees.
Job seekers are also experiencing the crunch of lower salaries amid a competitive labor market. Customer success specialist Josh Vogel told The Wall Street Journal that after getting laid off in October at a job that paid him $170,000 per year plus an annual bonus, he recently accepted a role making $120,000 per year.
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“No one is paying what they used to,” Vogel told the outlet. “If you don’t like it, there’s 50 people behind you they’re going to call right afterward.”
Employers are also hiring at lower rates, increasing competition among job seekers for open positions. U.S. Bureau of Labor Statistics data shows that the hiring rate has stayed around 3.3% since June, down from around 4.6% in 2021. USA Today notes that the hiring rate now is similar to what it was in 2013 when the labor market was coming back after the Great Recession.
The only sector unaffected by lower salaries when changing jobs is finance, per the WSJ.
Many banks that had record earnings in 2024 are paying finance job candidates higher salaries when they switch roles. However, JPMorgan gave employees lower bonuses than some expected this year.
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