Why you should switch jobs every 2 to 3 years to boost your earnings
Has your pay been languishing, with annual raises barely keeping up with inflation? It may be time to look for a new gig.
People who change jobs frequently experience faster wage growth, a number of U.S. surveys have shown. Among full-time workers, job switchers saw their pay go up by 4.9 per cent year over year, compared to 4.3 per cent for job holders, according to the latest available data from the Workforce Vitality Report by ADP, a U.S.-based payroll services company. That might not seem like much of a difference, but over a lifetime it adds up. Staying employed at the same company for more than 10 years can on average lower your earnings by 50 per cent, a Forbes article reckoned a few years ago.
This trend exists in Canada as well, said Salvatore Ciolfi, editor-in-chief at Workopolis.
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In an economy where salaries in many professions move in lockstep with inflation, looking for new opportunities every few years is a way to give your wage some extra oomph.
When you’re gainfully employed and you’re discussing pay with a different company, “you’re negotiating from a position of strength,” he noted.
The average salary boost employees receive when changing jobs is between 10 per cent and 20 per cent, according to Forbes. Pay increases of 15-20 per cent are rarer in Canada, even for switchers, Ciolfi said, but entirely attainable in certain sought-after professional categories. In general, climbing the wage ladder by moving to a different employer become easier once you’re past entry-level positions, which generally requires three to five years of experience.
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But switching alone may not be enough
While switching jobs every two to three years has become the norm, changing employers per se doesn’t guarantee a massive raise, cautioned Laura Jackson, senior search consultant at Options Consulting Solutions, a Toronto-based recruiting firm.
In all likelihood, surveys showing drastically higher wage growth for job switchers are capturing the fact that high achievers tend to seek out fresh challenges on a regular basis.
In most cases, a new employer won’t be prepared to pay you significantly more than your current paycheque to do the same job you already hold. A lateral move might net you $2,000 more, but that’s about it, Jackson said, unless you work in a highly competitive field where firms are vying for a handful of highly skilled professionals (think: software developer working on artificial intelligence).
“Most companies do know the market value of the positions they’re hiring for,” Jackson said.
A large pay jump, then, generally requires taking on a position that carries more responsibility or requires new skills. For that, an annual boost of between $10,000 and $15,000 is common for professional jobs, according to Jackson.
How often is too often?
In a 2014 analysis of over 7 million Canadian resumes, Workopolis found that the number of people who stayed at the same job for less than two years doubled, from 16 per cent to 33 per cent, between 1990 and 2000, according to Ciolfi. Over the next 15 years, that share kept growing, reaching over 50 per cent, he added.
In 2014, only 30 per cent of people who’d submitted resumes to Workopolis had been in their last listed job for over four years.
“It was a pretty dramatic change in the course of 25 years,” Ciofli said.
But jumping ship too often can hurt your career – and hopes for a fatter paycheque – rather than help it. A resume showing a pattern of switching jobs after less than a year will raise red flags, Ciolfi said.
Turnover is expensive for employers, so leaving after less than 12 months often means burning bridges. No company wants to be a stepping stone, added Ciolfi.
How to negotiate with a new employer
When it comes to discussing pay with a new employer, experts’ first piece of advice is “do it.”
“Don’t accept the first offer, always make a counteroffer,” Ciolfi said.
The second piece of advice, though, is, “do your research.”
Asking for an eye-popping amount of money that’s far beyond what your job usually commands won’t get you far, according to Jackson. Instead, look up what the salary range is and come to the table prepared.
Also, make sure to look at the whole compensation package, not just the base salary, she added. A job that offers a higher base but requires significantly more hours and comes with less generous benefits is a bad deal.
Often employers are bound by salary bands and rules of internal equity and won’t be able to offer you more than a certain amount, said Jackson. If their upper bound falls short of your expectations, you can ask for more vacation time or a bigger bonus.
Also, don’t forget to compensate for perks you might be missing out on by switching employers, such as RRSP and maternity leave top-ups, which often become available only after a period of time spent on the job.
If you’re losing your top-ups and face a new waiting period, you might be able to negotiate a signing bonus, according to Jackson.
“If you’re a candidate that they want to hire, they’ll figure it out,” she said.