What Is a Typical Salary Increase When Switching Jobs?
Workers have more reasons than ever to change jobs in a time of abnormally high inflation and employment disruptions. Often times this is the only way to get the required salary increase to keep up with the cost of living.
Workers have more reasons than ever to change jobs in a time of abnormally high inflation and employment disruptions. Often times this is the only way to get the required salary increase to keep up with the cost of living.
Employee salary needs to climb by as much as 7.5% so far in 2022 just to stay up with inflation rates alone. According to several studies we will share in this article, a portion of US workers have been able to keep up with and even beat inflation by switching employment.
In this article, we will look in detail at what salary jumps you should expect when switching jobs.
The impact that inflation has had on consumers cannot be overstated. According to a survey by The Conference Board, 62% of participants are concerned that their current incomes won't keep up with inflation. However, for some people, changing jobs is an effective solution to this problem.
People who left their workplace during the pandemic for another job were questioned about how their cash remuneration package, which includes pay and bonus, had altered.
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29% claim that their pay has improved in their new position by more than 30%. 20% had their pay raise by 10% to 20% while 27% make about the same amount of money or less than they did in their previous position.
But these figures are very generalized. Typical salary change varies widely based on the type of industry you work for, your seniority, and even the part of the US you are working in. In this article, we will look at in detail what salary increase you should expect if you are planning a job or career change.
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What is a typical salary increase when switching jobs?
Changing jobs frequently was once frowned upon in terms of career planning. People who did change careers quickly even got called "job hoppers," and hiring managers would be suspicious of candidates with so many jobs listed on their CV.
However, switching jobs frequently now seems to be the new norm. According to a poll by the Bureau of Labor Statistics (BLS), workers nowadays typically change occupations approximately 12 times throughout the course of their careers.
According to a different BLS poll, the average job tenure for men was 4.3 years and for women, it was 4 years. It is now believed that because job-hoppers are always adapting and looking for new challenges, they may even make better employees.
The ability to significantly raise your compensation is the biggest advantage of changing employment every few years. This is especially true in the economic environment of today. Career advisers assert that changing jobs frequently may be the only way left to earn more money throughout the course of your career.
By the way, if you want a detailed guide into how to switch career paths that covers everything from beginning to end, check out this guide!
Employees who work for organizations for more than two years earn 50% less
The fact that employees are making less and less money on average every year is the worst-kept secret according to Forbes. There are countless reasons for this, but they chose to concentrate on one that we have some degree of control over.
According to Cameron Keng of Forbes, you will make less money over the course of your life if you work for the same employer for longer than two years on average.
Remember that 50% represents a conservative estimate at the low end of the range. This is based on the assumption that your career will only last 10 years. Over the course of your lifetime, the difference will increase the longer you work.
In these economic circumstances, the average US employee will receive a raise of less than 1%, and there isn't much we can do to influence management's choice. However, we can choose whether we want to continue working for a company that will raise our pay by less than 1%.
Now, the typical compensation boost when you change jobs or careers is from 10% to 20%. There are even some extreme occasions where people received more than 50%, but this varies depending on the specific conditions and industry of each person.
Why is it that those who switch jobs are rewarded while loyal staff seem to be penalized? There is an easy answer to this. Businesses usually freeze their wages during recessions and cut the salary of newly hired employees in accordance with "market trends."
These responses to the recession are legitimate, but the issue is that they were meant to be "temporary" fixes. Instead, these policies have now become the "norm" in the industry. What's more, we've all grown accustomed to hearing about "3% raises" and have learned to accept it as the new "standard."
In the past, people would work at the same place of employment for 40 years before retiring and collecting a pension. Those times have long since passed. American workers are switching employment considerably more frequently for a number of reasons with some even considering setting up their own businesses.
According to PayScale's 2021 Compensation Best Practices Report, one significant factor is the fact that the typical yearly rise for American workers has been hovering around 3% for the past few years as we just discussed above.
Employees who remain at the same job for many years run the risk of losing thousands of dollars over the course of their careers with little to no true job security. It makes sense to switch jobs if companies aren't as reliable employers as they used to be and there aren't any significant raises these days.
As a general rule, while changing jobs, you should ask for a 10%–20% pay raise over your previous salary and you can often get that increase. Employees who remain with the same employer may only receive a meager 2-3% rise each year if they are even eligible for one.
According to the majority of career consultants in 2022, getting a new job is becoming a better option than asking your present manager for a raise if you want to enhance your compensation.
But there is another great thing about getting a good offer from another company… If an offer is made to you, you can check to see if your current employer counters it. According to a recent poll, nearly 50% of businesses made a counteroffer for significantly more money to keep a worker.
However, keep in mind that counteroffers can backfire. If a manager refuses to give you a counteroffer and you opt to stay with the same company for some reason, you might have jeopardized your chances of rising through the ranks of the organization permanently.
Depending on your industry, your prospects of earning a greater wage can also change. While you may typically anticipate a raise in pay, there are some professions where this isn't the case. Additionally, not all pay raises are created equal. Here are some further findings from the Zippia research:
When changing occupations, the Resources and Mining sector offers an average wage gain of 11.8%.
That is an increase of 5.3% from the previous year and, on average, 18% higher than the next closest industry. Overall, this makes this profession a fantastic choice for changing jobs.
The second-highest salary rise when switching jobs is seen in the information and professional services sectors, with 9.7% and 9.6%, respectively.
It is still easy and advantageous to change occupations in these industries because the rate is still 40% higher than the national average of 5.8%.
The lowest positive salary growth for changing jobs is found in the trade and transportation sector, at 2.2%, and is on the decline, having dropped 1.3% during the previous 12 months.
Average salary increase when changing jobs by demographics
The increase in earnings for people who change employment is also influenced by their age and gender. The largest wage rises typically reach a maximum at around 35 and then start to decline.
Older workers (55+) get the lowest wage growth, at just 4.1%.
As opposed to the senior group, workers between the ages of 25 and 34 may expect an average pay growth of 9.8%, which is 58% greater.
Since 2020, wages for workers between the ages of 16 and 24 have grown by just 1.7%.
Despite still outpacing the 55+ age group in terms of income increase when switching jobs, this age group has experienced the worst decline over the past 12 months.
When switching occupations, women typically see an income growth of 14% more than men.
Men's average income rise after changing jobs is 5.5%, while women's average is 6.4%. With a 1.1% increase from 2020–2021, women have also experienced a more consistent rise in their salary growth while changing employment.
Nevertheless, the average wage gap between men and women is $32.61 to $27.79.
College-educated black males still earn 20% less than college-educated white men, despite the fact that race doesn't appear to have an impact on salary negotiations.
That difference primarily comes from the white person's hourly wage of $30 and the black person's hourly wage of $24.
The poorest severance packages for job changers are offered by businesses with 500–1,000 employees, at 3.2%.
With a 6.9% increase, companies with 1,000+ employees have the biggest job-hopping salary increase.
Average salary when changing jobs by region
Your average pay while changing jobs can also depend on where you are on the US map. How does the average pay you receive when changing jobs depend on your location? Here is what the analyst at Zippia discovered:
With a rise of 8.8%, the Northeast (New England) delivers the highest average salary growth when changing occupations.
Additionally, this number has grown the fastest among other regions, at a 2.1% annual rate from 2020 to 2021. Pay growth in the Northeast is 11% higher than in the West.
When shifting jobs, employees in the West receive an average 8% rise.
States like California, Oregon, and Washington are included in this.
The Midwest has the lowest rate of salary increase, at only 3%, making it the worst region for job switching.
Additionally, this number is currently falling, having dropped by 1.9% in 2020.
With an average pay of $27.01, the South has the lowest salary for job-hoppers. Comparatively speaking, the North and the West give average job-change salaries of $35.32 and $34.76 respectively.
Oddly, when switching jobs, however, salary growth in the South is still higher than in the Midwest, at 5.6%.
When should you change jobs to increase your income?
Here's how to time your next job change so that you can get a good salary increase.
When the offer of pay raise is substantial enough
According to Kelly Brooks, Executive Director of Human Resources at the talent-solutions company Atrium, people often only get a $5,000–$10,000 gain when they change jobs. Higher-level executives might not find that compensation raise to be a sufficient incentive.
According to Christy Hopkins, PHR, a recruiter and HR consultant at 4 Point Consulting, "If you're at $40,000, [$5,000 to $10,000 is] a lot of money, but it's not as meaningful if you're at $100,000."
Make sure the job you are eyeing will improve your wage sufficiently to make it worthwhile on taking a chance on a completely new work environment before you start planning your exit strategy.
If the market indicates you are being underpaid
How much money is worth leaving your job? Although you might be comfortable at your current job for a while, the market may have been shifting right under you. It's a scenario that many employees have seen before.
Employees who have held the same post for ten years receive regular annual pay rises and then find out that someone who just graduated from college is earning more than they are.
That is why keeping tabs on market activity is crucial. If you are being underpaid it is highly likely that you will get a substantial pay increase when you switch jobs. To find out the market rate for your position, visit websites like Salary.com, PayScale.com, or SalaryExpert.com. When it comes time for the interview rounds, you'll be prepared with information on your value.
When you can clearly demonstrate a "success graph" for your contribution to an organization
You can discuss how you contributed to your present company's increase in earnings at any time, but demonstrating the outcomes could have a much more significant impact on the compensation you are offered.
You will be in a stronger position to really advocate for a solid wage increase if you are able to quantify your accomplishments.
Let's say you contributed by closing a big deal worth $1 million in monthly revenue. Create a graph to help your interviewer understand how much of an influence you had on this contribution.
Most employers believe you are capable of doing something if you have done it before. By demonstrating to the potential employer how you add value, you'll be putting yourself in a position to be able to ask for and receive more money.
When your stock options and 401(k) have vested
Find the benefits information you most likely received on your offer letter on your first day at work and check to see when your stock options or 401(k) are vested. Most vesting schedules begin in the third year. You can lose those earnings if you leave earlier.
After you have your bonus in your hand
If your employer only offers a bonus once a year in January, quitting in December will prevent you from receiving it.
That’s hard-earned money in your pocket that would be lost. It makes the most financial sense to remain in your existing work until after the bonus paycheck arrives… unless your salary raise is expected to be much higher than your bonus.
After you successfully land that promotion
Here is a tried-and-tested method for changing jobs:
Get a promotion and perhaps even a fancier job title.
Start looking for a new job with your updated resume.
Switch as soon as you have a good offer with a good pay increase.
This usually works well for substantial pay increases, but you should be ready to justify your quick departure. Some managers question an employee’s loyalty when they look at a resume and see that someone who's just been promoted is choosing to leave so quickly. They will want to know why you want to jump ship if you're a good performer, and you just earned that promotion.
Money isn’t everything
Before we close the subject we feel there is one more important thing we should discuss - the fixation on pay increases alone. Besides pay increases, the nationwide poll conducted by The Conference Board we discussed earlier, revealed that at least when selecting a career, money isn't everything.
Aside from a respectable wage, employees stated the most desired job benefits are flexible work schedules and retirement plans.
Despite historically high employee turnover rates, more workers are choosing a larger title in their counteroffers than a larger salary primarily because this in turn will eventually result in a substantial salary increase.
45 percent of US employees disagree that income is the most crucial factor in choosing a job.
Only less than a third of people agreed income gain was the primary focus.
A retirement plan contribution from the firm (including a match) was cited by 72% of respondents as one of their top priorities in negotiations.
71% of respondents ranked workplace flexibility as their top priority.
Among the key benefits, generous paid time off was chosen by 64% of respondents.
For more men than women, equity awards (stock options or stock grants) rank among the most significant employment perks
Men: 42 percent
Women: 26 percent
So while a typical salary increase when switching jobs is important, don’t focus on it entirely. Other benefits also play in when determining if your job switch is worth considering.
Final Word
Changing jobs is a difficult but necessary professional, financial, and personal decision for your career path. Uncertainty about their new job and the potential for a raise when changing employment is one factor that frequently prevents people from making a job or career change.
The truth is that one of the most common ways to quickly increase your salary is through a job change.
In this article, we talked about what a normal pay raise while changing jobs looks like by demographics, region, and by industry. We also discussed what signs to look for to get the most out of your job change.
Our conclusion is that you should change your job every 2 to 3 years to keep your salary at par with or above your market value. Otherwise, with inflation and the way things are, you will actually start making less because of the devaluation of your earnings.
We hope that this guide has been useful to you and helps you make an informed decision. Best of luck with your future jo
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Frequently Asked Questions
How much should your income increase when changing jobs?
A good compensation boost when changing employment is often between 10 and 20%. Don't be scared to request a raise that is similar to the 14.8% national average. When you switch jobs, you should at the very least anticipate a 5.8% wage increase.
Is it too much to ask for 20% raise?
Always negotiate for a salary that is 10% to 20% higher than what you are now earning. Depending on your performance, how long you've worked for the organization, and other considerations, you might be eligible to request more. When negotiating your increase, be sure to be prepared and confident.
Should employers give cost of living increases?
Regularly increasing your employee's pay is an excellent habit to maintain. This may be granted based on their increased experience, in order to remain competitive with business rivals, and more. Regular raises would not only aid in employee retention but also aid workers in meeting their varied living expenses.
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