Earning

This is 'the best way for anybody to make more money' in this economy, according to an expert

Sam Becker@smbecker
Akarawut Lohacharoenvanich | Getty Images

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.

Why it can pay off to get a new job offer

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:

  1. Take the offer and transition to a new, higher-paid job.
  2. 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, says career strategy consultant Janet Matta, 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," 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.

You're more likely to have a salary increase by finding a new job rather than asking for a raise.
Janet Matta
Career strategy consultant

The risks of job-hopping

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.

More from Grow:

Get the Grow Newsletter Every Week
The best money advice you never got, delivered to your inbox weekly.
The best money advice you never got, delivered to your inbox weekly.
 

Akarawut Lohacharoenvanich | Getty Images
acorns+cnbcacorns cnbc

Join Acorns

GET STARTED

About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBC Universal and Comcast Ventures are investors in Acorns Grow Incorporated.