Base pay for job changers in the private sector increased 4.7% in August, compared to 3% for job stayers, according to the latest report from payroll provider ADP.
When you consider gross pay, which includes tips, commissions, and bonuses, wages for job stayers rose 4.4% year over year, while gross pay for job changers increased substantially more: 7.3%.
In another recent report, the job-jumping news was just as promising.
The median pay increase for workers switching jobs rose to 5% last month from 4.4% in July, according to new data from the Atlanta Fed. For those who stay put, the average pay increase was 3.6%, the same as in July.
“There is an opportunity to boost wages by changing jobs, even in this low-hire, low-fire jobs market,” ADP chief economist Nela Richardson said.
‘Every sector tells a different story’
Not all job changers will reap the same rewards.
“The real action is under the surface,” Richardson said. “Every sector tells a different story. For example, construction workers see the highest job changer pay. Employers would like to hire more people in construction and can’t find the workers, and wages are adjusting appropriately.”
Leisure and hospitality are the opposite. It’s the only sector that ADP tracks in which gross pay for job changers is lower than for job stayers. That sector, Richardson said, “rewards stability and loyalty over job changing.”
Read more: What to do when your pay raises aren’t keeping up with inflation
According to new Bank of America Institute data, workers who are paid by the hour and receive a weekly paycheck are getting the biggest pay bumps, along with Gen Z workers who are kicking off their careers at relatively low wages.
“We’re clearly seeing the pay incentive to switch jobs is strengthening, especially on the small business side of things,” Taylor Bowley, an economist at the Bank of America Institute, told Yahoo Finance. “For those people looking to change jobs, their bargaining power is definitely increasing.”
One key factor: a dearth of qualified applicants.
“A lot of businesses over the past several months have been reporting that they’re having a hard time filling positions because the applicants’ skills don’t match what they’re looking for,” Bowley added.
This reality has been playing out across the board this year. Nearly 70% of human resource professionals report challenges recruiting for full-time positions, according to a report by the Society for Human Resource Management.
Eight in 10 HR professionals report their greatest difficulty is finding candidates with the right skills. Not tech skills or AI know-how — they’re talking about communication, judgment, decision making, complex problem solving, and time management.
That said, even though the pay incentive to job-hop is reigniting, many workers are remaining on the sidelines.
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“While we are starting to see more of a premium come back for workers who are willing to hop jobs, and it has widened quite significantly over the last three months, it has not translated yet into an uptick in people doing that, which is still exceedingly low,” KPMG chief economist Diane Swonk told Yahoo Finance,
Despite the growing premium for job changers, so far there hasn’t been a corresponding increase in the quits rate, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey, she added. “So it is still not enough to really get a lot of workers to move yet.”
That said, how people feel about the job market overall is improving, the New York Fed recently found, which could be a sign that they’re poised to make the leap to another company for a fatter paycheck.
That’s an upbeat sign, per Swonk and other economists.
“To me, that sense that you have the ability to change jobs indicates that there’s underlying confidence, and that’s good,” Bowley said.
Pay is only one factor
When you’re a job shifter, it’s not always about the money.
It’s important to “understand why you are eyeing a job jump in the first place,” career coach Aileen Axtmayer told Yahoo Finance.
People tend to look for a new job for a plethora of reasons amid the day-in and day-out at their current company.
“For many of my clients, it’s that feeling of being undervalued by their employer that shows up in not being promoted, or given opportunities to expand their scope, or take on more meaningful work, or they don’t see a path for growth where they are,” she said.
Axtmayer’s advice for job seekers: “Being underpaid, or not compensated in alignment with market value, is certainly an important factor, and a meaningful pay bump can absolutely be part of a compelling reason to make a move,” she said. “But I wouldn’t advise someone to make a transition decision based on salary alone. Compensation is only one signal that it’s time to look for something new.”
Culture and manager fit, opportunities for growth, flexibility, benefits, commute, and the nature of the job itself should all be part of the decision.
“With return-to-office mandates changing the flexibility equation for so many employees, that can also be a particularly significant consideration right now,” Axtmayer said.
If you land an opportunity where those other factors align with what you’re looking for and the organization is willing to compensate you at a higher level, there can be a longer-term benefit to the pay bump, she added.
“A move can effectively reset your market value and establish a higher compensation baseline for future opportunities and negotiations, particularly for someone who has been underpaid relative to their experience or contributions,” she said.
