Earning

How job hopping can help you make more money without hurting your resume

Welcome to Asking for a Friend, Grow's money advice column. Got a question for one of our money experts? Email us at getgrowing@cnbc.com.

Dear Asking for a Friend,

I've heard that job hopping can get me a higher paycheck. But I'm worried that this could backfire.

I do like my current job, and a long list of short-term roles may not look great on my resume. At what point should I be negotiating for more, or thinking about leaving to find something new? How can I walk the line to get a better salary and a better career?

Sincerely,
Tentative Job Hopper

*

Dear Tentative Job Hopper,

A company I worked for early in my career had an interesting hiring practice. They'd pull in about five people from various positions to grill the interviewee all at the same time. Afterwards, there'd be a group debate about whether or not to hire the interviewee.

In one case, the woman we were interviewing had been at five companies in four years. I thought it was an indicator that she'd probably jump again fairly soon, so I mentioned that to my colleagues. She was still hired for the role, and she ended up jumping around the one-year mark.

I share this story because job hopping was a common practice in 2013 and it continues to be popular for a good reason: Workers who switch to new jobs saw their wages increase by an average of 5.1% over the last year, according to ADP's Workforce Vitality Report.

In my experience, job hopping earned me tens of thousands of dollars more than slugging it out at one company. But I also changed industries, which is another highly useful tactic.

Your worry about a long list of short-term roles is warranted, but it's also important to define "short-term." For many millennials, three years is a fairly long tenure at a company. In a 2018 study from Deloitte, 43% of millennials reported that they considered leaving their jobs within two years, and 28% said they didn't see themselves staying at a company longer than five years.

Being, say, eight years into your career and having held three different jobs probably isn't as worrisome as you think. Hopping each year, though, may be more of a red flag, depending on your industry.

Getting more money from a current job is hard but not impossible

Generally speaking, it's much easier to get a big raise when you jump than when you try to negotiate in-house.

Before you make any decisions, you need to know the pay raise structure within your current company. Is it a cost-of-living raise? A merit-based raise? Is there an opportunity to earn a bonus?

The average base pay raise hovers around 3%, according to a recent survey about compensation from PayScale. But high performers who secure a promotion can snag the larger raises in the 10%-to-15% range.

Which begs the question: Are you that much better than all your coworkers?

Generally speaking, it's much easier to get a big raise when you jump than when you try to negotiate in-house.
Erin Lowry
author of 'Broke Millennial'

Securing a 10%-to-15% bump when you switch jobs isn't outside the realm of possibility and could be easier than getting a promotion, or a significant raise, where you currently work.

It's worth it to try and negotiate and see what kind of bump you can secure for yourself if you like your job and employer. But it never hurts to go on interviews to see what other salary opportunities exist for you in your field.

If you're planning to use another offer as leverage in a negotiation with your company, though, then you also should be prepared to leave if your company isn't willing to pony up.

Job hopping is about more than salary

Consider your opportunities for career advancement, not just salary, when you start looking around, and be realistic about the opportunity to move up the ladder at your current company.

If your direct supervisor recently got a promotion, is their old role something you could pitch yourself for? If so, give it your best shot. Remember during this process, though, that your company leadership could decide not to fill the role, or to change it, for a variety of reasons you might not be privy to.

If another candidate ultimately lands that position, it could be an even longer wait to get more responsibility, especially if that's the only natural next step up. Changing employers to bypass a logjam in promotions on your career path might then make more sense.

Regularly check in and ask yourself, are you still being challenged, learning new skills, and getting opportunities for mentorship? If not, it's likely time to seek out a new job.

Are you still being challenged, learning new skills, and getting opportunities for mentorship? If not, it's likely time to seek out a new job.
Erin Lowry
author of 'Broke Millennial'

Remember to examine other forms of compensation. Benefits are extremely important. See how the potential new job stacks up to your current one in terms of health care, retirement, paid vacation days, and parental leave policies.

It's also important to know how much you'll be leaving behind in your retirement plan if you hop. Look up your company's vesting policy to determine how much of your employer's contributions you can walk out the door with.

Be able to explain each career move

One of your well-honed interview skills can become the ability to justify your job hopping. Hopefully it speaks for itself on paper and you consistently are moving up with each new job.

Another simple way to justify a hop is to switch industries entirely.

And be sure you can handle the "Wow, you've moved around a lot. Why is that?" question in a job interview. Note: It's better if the answer isn't that it's because you were butting heads with management or coworkers, because then the common denominator of your issues could appear to be you.

Best of luck,

Erin

Erin Lowry is the bestselling author of "Broke Millennial: Stop Scraping By and Get Your Financial Life Together″ and "Broke Millennial Takes on Investing: A Beginner's Guide to Leveling Up Your Money.″ You can follow her on Instagram @BrokeMillennialBlog or Twitter @BrokeMillennial.

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