If you hope to see any sort of significant pay raise this year, finding a new job may be your best bet.
Most employers plan to offer workers raises of 3% or less over the next year, according to PayScale's 2019 Compensation Best Practices Report. Considering that the inflation rate has hovered at around 2%, most workers are seeing an effective raise of around 1% — if they're getting a raise at all.
Meanwhile, people who switch jobs saw their earnings increase by an average of 5.3% over the past year, according to ADP's Workforce Vitality Report.
In fact, "job-hopping" every 3-5 years may be the key to earning significantly more money over the course of your career. And experts say it's especially effective in the current economic climate.
"The best way for anybody to make more money is to leave their job and go get a new one," job search strategist Hannah Morgan of Career Sherpa recently told Grow.
Here's why, and how to take advantage.
Because unemployment is low and employers are having a hard time finding qualified employees, workers are in a prime position to capitalize by securing a competing offer, Morgan says.
This could play out to your advantage in one of two ways:
- 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.
"You're more likely to have a salary increase by finding a new job rather than asking for a raise," Matta says.
A competing offer can force your current employer's hand. Almost half of companies have made a counter offer of "significantly higher pay" to keep an employee, according to a 2018 Ziprecruiter survey.
Of course, there's always the risk that presenting your current company with a competing offer will backfire. They may decline to match the offer. Even if they do and you choose to stay put, you may have dampened your chances at advancement.
So, be sure you're actually willing to leave your current job before soliciting other offers.
But experts say 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.
Also, 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 to hop. 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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