Even in this record-low unemployment market, companies have been keeping salaries in check. But new government figures suggest that those who jump ship are starting to get around that.
Employees who changed jobs in January saw their wages grow 4.6% on average from a year earlier, according to new data from the Federal Reserve Bank of Atlanta. It’s the fastest growth for job switchers since October 2007, and handily beats the 3.4% growth in wages for those who stayed in their current jobs.
The rising wages, combined with unemployment near historic lows and a record number of job openings nationwide, means leaders are increasingly having to walk a fine line to keep costs under control while still retaining their best employees. “It’s kind of a challenge,” says Tom McMullen, a Korn Ferry senior client partner and leader of the firm’s North America Total Rewards practice.
It isn’t surprising that job switchers are seeing their wages grow faster than people who stay in their existing jobs. Over the last 20 years, the only time stayers out-earned switchers for any sustained period was in the second half of 2009, when the country was just starting to recover from the financial crisis. But this is the first time that switching jobs has given workers, on average, a more than 4.5% bump in wages in nearly 12 years.
And Americans are taking advantage. Nearly 3.5 million people quit their jobs in December 2018, an increase of 4.2% from the same time a year earlier.
But employers may not have to get into a salary war to keep their top talent from leaving, says Melissa Swift, a Korn Ferry senior client partner in the firm’s Digital Solutions practice. Sure, offering competitive salaries is important, but so is showing employees that they have a viable, interesting career path if they stay. Employers must show the employees that if they stick around then they will continually get more interesting work.
Another key, says Swift, is for senior leaders to empower lower-level managers with tools that can help keep employees. When an employee tells their boss that they have a competing, higher-paying job offer, those bosses may only know that they can’t match the salary. But if the boss can offer other incentives, such as leadership development training or project management certification, the chances that the employee will stay increase. “For individual managers, they need that tool kit,” Swift says.
Even if switching jobs doesn’t get them big raises, workers increasingly don’t want to be tied down to either a role or an employer. Indeed, the average job tenure in the United States has dropped to 4.2 years, according to data analysis by the US Bureau of Labor Statistics. That is down from 4.6 years just five years ago and continues a long-term decline. Leaders who can’t motivate workers or provide them with an interesting career path will increasingly find employees checking the job listings.
“It’s not just millennials—workers today are less and less motivated by just compensation and more motivated by the kind of work they can be doing,” Swift says.