Job Switchers See Wage Gains Return Amid Sluggish Hiring

Career transitions are becoming financially rewarding once again.

According to the latest data from payroll provider ADP, base pay for private-sector job changers rose by 4.7% in August, significantly outpacing the 3% increase seen by employees who stayed in their roles.

When accounting for gross pay—which encompasses tips, commissions, and bonuses—the disparity is even starker. While wages for job stayers increased 4.4% year over year, the gross pay for those who switched jobs surged by 7.3%.

A separate report corroborates this promising trend for job hoppers.

Data from the Atlanta Fed reveals that the median pay increase for workers who switched jobs climbed to 5% last month, up from 4.4% in July. Conversely, the average pay increase for those who remained in their current positions held steady at 3.6%.

“Even in this low-hire, low-fire market, there is a clear opportunity to boost wages by changing jobs,” said Nela Richardson, chief economist at ADP.

Every Sector Tells a Different Story

However, the financial benefits of job-changing are not uniform across the board.

“The real dynamics are happening beneath the surface,” Richardson noted. “Every sector tells a different story. For instance, construction workers experience the highest pay boosts when changing jobs, as employers struggle to find talent and adjust wages accordingly.”

The leisure and hospitality sector presents the opposite trend. It is the only industry tracked by ADP where gross pay for job changers falls below that of job stayers—a sector that Richardson says “rewards stability and loyalty over job changing.”

New data from the Bank of America Institute indicates that hourly workers receiving weekly paychecks, alongside Gen Z professionals starting their careers at lower baseline wages, are experiencing the most significant pay increases.

“The financial incentive to switch jobs is clearly strengthening, particularly within the small business sector,” Taylor Bowley, an economist at the Bank of America Institute, told Yahoo Finance. “For those considering a move, their bargaining power is undoubtedly increasing.”

A primary driver of this trend is a persistent shortage of qualified applicants.

“Many businesses have reported over the past few months that they are struggling to fill open positions because the skills of available applicants do not align with their needs,” Bowley added.

This challenge is widespread this year. Nearly 70% of human resource professionals report difficulties recruiting for full-time roles, according to a report by the Society for Human Resource Management.

Eight out of ten HR professionals state that their greatest challenge is finding candidates with the right skills. The deficit is not in tech or AI expertise, but rather in communication, judgment, decision-making, complex problem-solving, and time management.

That said, despite the reigniting financial incentive to job-hop, many workers remain on the sidelines.

“While we are beginning to see a growing premium for workers willing to change jobs—widening significantly over the last three months—this has not yet translated into an uptick in actual job changes, which remain exceedingly low,” Diane Swonk, chief economist at KPMG, told Yahoo Finance.

Despite the growing premium for job changers, there has been no corresponding increase in the quits rate, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey, she added. “It is simply not enough to motivate a lot of workers to make a move yet.”

However, the New York Fed recently found that overall sentiment regarding the job market is improving, which could signal that workers are poised to leap to another company for a better salary.

This is an encouraging sign, according to Swonk and other economists.

“To me, the sense that you have the ability to change jobs indicates underlying confidence in the market, which is a positive sign,” Bowley said.

Pay Is Only One Factor

When considering a job shift, the decision is not always about the money.

“It is important to understand why you are eyeing a job jump in the first place,” said career coach Aileen Axtmayer to Yahoo Finance.

People often look for a new job for a variety of reasons amid the daily grind of their current company.

“For many of my clients, it is that feeling of being undervalued by their employer—manifesting as a lack of promotions, missed opportunities to expand their scope, a lack of meaningful work, or no clear path for growth—that drives them to look elsewhere,” she said.

Axtmayer advises 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. “However, I would not advise someone to make a transition decision based on salary alone. Compensation is merely one signal that it is time to look for something new.”

Company culture, manager fit, growth opportunities, flexibility, benefits, commute, and the nature of the job itself should all factor into the decision.

“With return-to-office mandates changing the flexibility equation for many employees, this can be a particularly significant consideration right now,” Axtmayer said.

If you land an opportunity where these other factors align with your goals and the organization is willing to compensate you at a higher level, the pay bump can yield long-term benefits, 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.

Kerry Hannon is a Senior Columnist at Yahoo Finance, a career and retirement strategist, and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.

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