First, the bad news: if you’ve been at your current company for longer than two years, you are most likely getting underpaid. But the good news? The stigma around job hopping is diminishing, so it’s acceptable to change jobs every two to three years to make sure you’re earning your full market value.
The longer you work, the greater the difference in salary you’re not making becomes. A conservative look at the numbers shows that staying in a job where you’re underpaid can lead a 50% lifetime loss of income. Five zero! Imagine what you could do with a 50 percent pay raise. But the craziest part of this statistic? Getting that 50 percent back in your wallet is all in your control.
The average raise an employee receives for changing companies is between 10 and 20 percent. Compared to the average three percent salary bump same-company employees receive year over year — the numbers add up.
“The problem with staying at a company forever is you start with a base salary and usually annual raises are based on a percentage of your current salary,” Senior Hiring Manager Bethany Devine told Forbes. “There is often a limit to how high your manager can bump you up since it's based on a percentage of your current salary. However, if you move to another company, you start fresh and can usually command a higher base salary to hire you.”
Devine goes on to describe an instance where a woman started her career earning eight dollars an hour. Over 10 years, she changed employers five times, which resulted in a salary that was four times more than what she started with. That’s approximately a 330% increase over a ten-year career.
So how come employers aren’t doing more to retain all-star employees? According to a recent survey, the slow growth in raises is due to the great recession and its resulting effects on the business world.
"Historically, many employees saw annual salary budget increases greater than three percent, with a drastic dip or freeze during the great recession," Jeff Blair, Hay Group’s U.S. Productized Services Leader, told ABC News. Instead of viewing this freeze as temporary, Blair reports, businesses have made the frozen price the norm and haven’t deviated since.
“Once you are entrenched in a company, it may become more difficult to be promoted as you may be waiting in line behind others who should have been promoted a year ago,” Devine said. “However, if you apply to another company, your skills may match the higher title, and that company will hire you with the new title.”
While it might go against your instincts to turn glowing performance reviews from one company into a higher salary at another, job hopping is more acceptable than you might think. Millennials are actively seeking out career advancement opportunities and are statistically less loyal to their employers. Even more surprising? Employers are totally fine with it.
Patty McCord, former chief talent officer for Netflix, says that potential hires who have changed jobs have an advantage over those who haven’t. “You build skills faster when changing companies because of the learning curve,” McCord said to Fast Company. “I think that the most important, critical change in people’s mental outlook is to view employees as smart contributors from the beginning.”
It’s important to be valued at work, but ultimately — you decide what that value is. Andrew Bauer, CEO of Royce Leather, told Forbes that monetary compensation shouldn’t dictate your entire career. Employees also need to consider their “quality of life, mental health, physical health and better moral standards.”
If you have a not-so-great salary but it’s for a job you absolutely love, it may not be worthwhile to change jobs. But if you’re looking for a company that appreciates you for your whole value, it might be time to update your resume.
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