If you haven’t gotten much of a raise recently and you’re wondering whether it might be worth it to jump ship to a better pay opportunity, Bank of America says to do so if you’re young.
Millennials who changed companies saw their after-tax salaries rise twice as fast as those who stayed put, bank data shows. It added that Gen Z performed even better, with earnings growth increasing fourfold.
Although the wage increase that job switchers will receive in 2022 will be significantly lower than during the “great resignation” period following the COVID-19 pandemic, Bank of America said in a research note that it is still a sign “that the labor market may be gradually improving.”
“If the labor market continues to improve, we could see some increase in the wage premium for job switching, especially given that premiums are currently lower than before the pandemic,” the bank said.
How much more can people expect to earn by changing jobs?
Overall, job changers saw an 8% increase in after-tax and benefits wages, better than the 5% increase for job leavers in the first three months of this year compared to last year, Bank of America said. But the difference between the two is the smallest in seven years.
By contrast, when there was a shortage of workers in 2022 as Americans were slow to return to work after the pandemic, workers were lured to leave their companies with pay increases of about 18% over the previous year, while non-switchers got a 7% raise, the bank said.
Does quitting a job get some people paid more than others?
Since Gen Z is seeing the most salary growth from changing jobs, it may not be surprising that they also have the highest job change rates. Bank of America said one in four changed companies in the first three months of this year. That’s 10 percentage points higher than the Millennial generation and three times the rate of Baby Boomers, but significantly lower than in 2022, the data shows.
The bank said older Americans — Gen X and Baby Boomers — were better off holding on to their jobs. The research showed that they saw wages flat or decline compared to a year ago, while workers in those groups who remained in their jobs saw a steady increase in their wages.
“Some people in this generation may be earning the same or less as some are choosing to work fewer hours, perhaps as they approach retirement,” Bank of America said. “It’s also possible that some people may have taken lower wages after being laid off or laid off.”
The bank said top earners did not get paid even after changing jobs. Instead, “for this group, it appears that loyalty pays off,” she said.
Bank of America said that in the first three months of the year, people in the top 5% by income were the only group where those who stayed in jobs saw stronger wage growth than those who changed jobs.
“Indeed, the wage premium for job switching has declined most among high-income households, particularly the top 5%, over the past four years,” it said. It said this decline could be due to a general slowdown in high-paying industries such as finance, information technology and professional business services.
“For example, those who lost their jobs may have to settle for less in a tight job market, while those who remain are now seeing larger pay increases. It may also be that in a ‘low hire, low fire’ environment, companies feel they have less reason to pay a premium to job seekers,” Bank of America said.
Medora Lee is the money, markets and personal finance reporter at USA TODAY. You can reach him at (email protected) and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday to Friday.