In the current job market, job-hopping may not be as lucrative as it once was. During the "great resignation" period, workers could expect a 20% pay increase when changing jobs. However, as the job market cools and companies become more cautious with hiring, the big signing bonuses and high salaries for new hires are dwindling.
Data from payroll provider Gusto shows that wages for new hires are now 5% lower than they were for new recruits in the same roles in July 2022. Tech and administrative roles have seen some of the sharpest declines in salaries. Additionally, nearly half of the employers surveyed by ZipRecruiter reported reducing pay for recent job openings.
Interestingly, while businesses are cutting new hires' salaries, jobseekers' wage expectations have reached record highs. A Federal Reserve Bank of New York survey shows that job seekers' average "reservation wage," or the lowest pay they would accept to switch jobs, climbed to $78,645 in July 2023. This is an 8% increase from the previous year and the highest number since the data series began in 2014.
The inflation rate and the lasting effects of remote work and the "great resignation" are contributing factors to the employee-employer disconnect regarding compensation. Liz Wilke, a principal economist at Gusto, states that the drop in pay for new hires is a normalization from the past two years when new hire pay was unusually high. Julia Pollak, chief economist at ZipRecruiter, adds that job seekers adjusted their salary expectations based on the "great resignation," while employers are trying to return to pre-pandemic norms.
Recession fears also affect new hires' pay, as there is less competition for talent, allowing companies to be less aggressive in their initial offers. Mass layoffs in the tech sector have also contributed to lower salaries for new hires, as companies no longer feel pressured to match offers from big tech firms. Additionally, the possibility of a recession or downturn has caused many companies to pump the brakes on spending and hiring, which has impacted job openings.
Overall, job-hopping may not be as financially rewarding as it was during the "great resignation" period. Companies are offering lower salaries to new hires, while job seekers have higher wage expectations. The current job market is influenced by factors such as inflation, remote work, the "great resignation," and recession fears.