We're in a great job market, with unemployment near record lows and more job openings than job seekers. Even so, though companies are competing to get and keep employees, it's not a given that you'll get a raise.
Just shy of half of workers, 49%, received a salary increase of some kind over the last year, according to a new survey from Bankrate. That's up from 38% who reported getting a pay bump in 2018, and the biggest share of workers reporting an increase since 2016. Still, that leaves 51% of workers with stagnant wages.
"It's a surprising statistic," says Scott Colbert, chief economist at Missouri-based Commerce Trust Bank. "I would've expected to see about 3% wage growth" across the board.
Colbert suggests that employers are focused on increasing profits above almost all else — which means cutting costs wherever they can. And because many employers can outsource their labor needs to other countries, many workers' wages in the U.S. are caught in a state of limbo.
"It comes down to globalization," Colbert says, which has acted as "a weight around wages and salary growth."
Just because you may have missed out on a pay raise in 2019 doesn't mean you have to in 2020. And given that unemployment remains low and that employers are still having a hard time finding qualified employees, workers are in a prime position to capitalize.
The best way to capitalize is to simply go out and get another job offer, according to job search strategist Hannah Morgan of Career Sherpa. "The best way for anybody to make more money is to leave their job and go get a new one," she told Grow earlier this year.
Video by Courtney Stith
In Bankrate's survey, while 28% of workers got a raise at their current job, 12% boosted their pay by getting a job with a higher salary — and another 10% used both tactics.
Getting a competing offer opens a couple of doors for workers:
- Take the offer and transition to a new, higher-paid job.
- Use the offer as leverage to get a better raise with your current employer.
What about simply asking your boss for a raise, without having a competing offer in hand? You can try, career strategy consultant Janet Matta previously told Grow: Brush up on your negotiating skills, set up some conversations with your boss, show up prepared, and you may be able to get what you want. But your best bet is to start interviewing: "You're more likely to have a salary increase by finding a new job rather than asking for a raise."
A competing offer can make your current employer take your request more seriously, or even force their hand. Almost half of companies have made a counteroffer of "significantly higher pay" to keep an employee, according to a 2018 ZipRecruiter survey.
There's always the risk that presenting your current company with a competing offer will backfire. Your manager may decline to match the other offer. Regardless, if you choose to stay put, you may have affected your chances of getting ahead where you are.
So be sure you're actually willing to leave your current job before soliciting other offers.
Experts warn that workers should be careful not to job-hop too frequently. If your resume boasts too many jobs over a short period of time, employers may second-guess your loyalty, or question your ability to hold down a job. Frequent departures can be a red flag.
"In my opinion, a reasonable timeline for your departure from a job is three to five years," Suzy Welch, a bestselling management author and CNBC contributor, told Make It last year.
Keep in mind that even if you're leaving one job for another with a higher salary, there can be financial consequences of job-hopping. For example, you may not be immediately eligible to contribute to your new workplace's retirement plan — or get the employer match. You might also be forgoing bonuses to take a new job, which you should consider working into negotiations so that you don't leave money on the table.
There are also some roles and fields where job-hopping is tougher. If you work in a niche industry or a small city, for example, you could run out of opportunities. Or if you're in a unionized field, it may make more sense to work your way up the seniority ladder to earn more money.
And if you're in an industry that is experiencing rapid growth or high demand for workers, it can pay to stick around. In the PayScale report, more than 4 in 10 employers reported giving pay raises of 10% or better for highly competitive jobs.
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