Employees Who Stay in Companies Longer Than Two Years Get Paid 50% Less
For the longest time in the history of work, loyalty and dedication to a particular employer has been heralded as the hallmark of the ideal employee beyond just being good at their job.
It is thus not surprising that the question of how long one should stay with one company before beginning to seek new opportunities keeps arising.
The question is even more important now with growing uncertainties in the global labor market where one could find themselves unexpectedly becoming unemployed after spending in the upwards of ten years at the same company and have to grapple with the vagaries of job-seeking after a layoff.
How long is too long to stay in one job? If you hate your current job and you cannot wait to move on, for how long should you stick around?
While there is no simple answer to these and related questions, it is apparent that job seekers are increasingly getting worried about the impact the time they spent on their previous jobs could have on their chances of getting hired.
Back in the day, you could have expected to stick with one employer for decades and retire with a comfortable pension, 401K or a golden watch, an option that is not any longer available for most of us.
But staying for a very short time at a company could have you labelled a job hopper which raises a serious red flag to hiring managers.
It can portray a prospective hire as somebody who cannot hold down a job, one who is unable to get along with workmates and lacking in commitment.
On the other hand, in today’s environment, staying too long does not necessary gift you the loyalty dividends that employers would be typically looking for. It could signal that you are unmotivated, too comfortable with familiarity and unable to adapt.
JOB HOPPING IS LOSING ITS BAD RAP
The good news as indicated by a 2011 PWC report, is that this long-held stigma against shorter stints is becoming antiquated fast as millennials continue to rise in the workplace.
They bring with them expectations of continuous learning, development and steady advancement in their careers.
The graphic below by the Bureau of Labor Statistics also shows that the number of jobs people hold within the course of their career has been steadily increasing.
If you have been browsing through LinkedIn lately, you might have noticed that it is now a norm to switch a job every few years.
In fact, an employment survey conducted by California-based global temp staffing firm Accountemps in 2015 affirms the projection that the future of work will be more characterized by career nomadism.
Accountemps found that 57 percent of millennial workers (aged between 18 and 35) view changing jobs often as being beneficial to their careers.
Even the older workers surveyed by Accountemps are no longer clinging to the dated belief of long-term company loyalty as much as would have been expected.
Although they are not as enthusiastic in embracing job-leapfrogging, a significant 38 percent of workers aged between 36 and 54 consider the idea of changing jobs frequently to be beneficial.
A more recent survey by staffing firm Robert Half puts the number of overall workers favoring job-hopping at 64 percent in 2018, up by 22 percent from a similar survey in 2014.
They found a staggering 75 percent of employees under 35 felt job-hopping would be of great benefit to their careers.
If the latest report on employee tenure released by the United States Bureau of Labor Statistics in 2018 is anything to go by, it is possible to put a number to how long you should stay at a single job.
The report indicates that wage and salary workers today change jobs every 4.2 years on average.
The report further elucidates the incidence of job hopping as represented by the median tenure of millennial workers standing at 2.8 years as compared to 55-64 age cohorts whose median tenure at one company is 10.1 years.
Career experts observe that changing employers or jobs sooner than later is not essentially a bad thing.
It can be in fact a very good move for your paycheck, given studies that have proven that those who stick with the same employer for several years tend to have lower pay growth than the rest who don’t.
ARGUMENTS FOR JOB SWITCHING
A 2014 Forbes report says that staying with the same employer for over two years on average will make you earn less over your lifetime by about 50 percent or more. Forbes says this estimate is in fact conservative.
Financial services provider, Nomura, in a recent analysis confirms what has probably been on your mind every time you have considered switching jobs.
That changing employers will almost always give you a bigger pay hike compared to staying with your current employer and betting on the periodic salary reviews or a promotion, if they indeed do come.
Recent ‘Wage Tracker’ data from the Federal Reserve Bank of Atlanta and human resource firm ADP’s ‘Workforce Vitality Report’, Nomura found that growth in wage was significantly lower for ‘stayers’ as compared to ‘switchers’.
Job switchers earned about 1 percent more year-over-year than stayers, a minimal difference from the surface if only one year is considered, but could accumulate to hundreds of thousands of dollars in lost wages when your entire career is factored.
The longer you work at the same company, the bigger the difference will be over your lifetime.
According to the US Bureau of Labor Statistics, the average raise an employee can expect in 2019 is about 3 percent with top performers expecting about 4 percent and the most underperforming employee could expect a 1.3 percent raise.
With a Consumer Price Index inflation rate of about 2 percent, the actual raise you’d get if it is granted would be just about 1 percent.
When compared to the average raise for an employee taking a new job at a new company the case for switching jobs becomes clearer when earnings are the most important factor.
You would expect a pay bump of between 10 and 20 percent if you switch jobs. The figures are could be even higher depending on circumstances and industry.
According to the Nomura report, switchers will likely have a stronger bargaining power and better salary increases when there are more opportunities in the market or when they find a higher-paid role better matching their talents.
Sticking With One Company Without Advancing Could Cost You
We change jobs for better opportunities; a better title, a better salary, more benefits, more meaningful or challenging work or even better work-life balance.
It is possible to get this with your current employer through the company’s promotion program.
But in this age of frozen raises, cutbacks and unemployment that would have some tell you that ‘you are in luck to even have a job’, this kind of advancement may not happen and you could end up stuck in a stagnant position for years in the name of job security.
Changing jobs is one of the clearest ways to get better compensation for your skills and boost your longer-term earning potential.
More research on external hires indicates an 18 to 20 percent higher pay for those hired eternally as compared to those banking on the internal promotion mechanisms in the same company.
Management professor Matthew Bidwell, in a study investigating the effects of external hiring versus internal mobility found that external hires earn much more than internal employees who have been promoted into the same jobs.
He, however, notes that external hires often will have better education and experience than internal employees angling for the same positions.
Bidwell’s research shows that employers tend to be more rigorous with the ‘externally observable attributes’ (i.e. education and experience) when evaluating prospective hires who are strangers to them which puts them at an advantage.
If you stick to one employer without moving up the ladder, prospective employers are likely to be suspicious of your effectiveness in a new role.
You do not only lose an opportunity to increase your earnings but also lower your chances of landing a new job.
Marketability Versus Time on the Job
While there is no strict time cap for when you should specifically jump ship, it is important to realize that the length of tenure at previous jobs is only one side of your career picture.
If you can keep growing your skills, demonstrate that are great at evolving into new situations, taking up more responsibility and keep building a diverse professional network, the time limit becomes less of a worry.
Staying for ten or more years at a job may be a positive thing if this is coupled up with gaining seniority and leadership responsibilities that give you more say in the company.
Your loyalty and dependability points will be solid.
But more often than not, as one IT recruiter observes, in today’s world, it’s easy to encounter employees let go after 10 plus years of service and they are basically left standing on island in their fields. Such people will find it hard to find new jobs.
The idea of leaving a job because you have been there too long is too simplistic.
If the opportunities for growth are clear, you have stayed up to date with your area of expertise and basically have been keeping your skills and yourself marketable, you can stay.
One advantage that switching jobs often gifts you is the opportunity to learn new skills and work in diverse environments that raise your profile as a multitalented and more marketable hire.
Donna Svei, an executive search consultant at AvidCareerist advises individuals who have stayed at the same company for more than seven years to find ways to indicate their ability to adapt on their resume.
This could be through mentioning involvement in a significant change management process, joint ventures or changing reporting relationships.
Job Hoppers Have More Intellectually Rewarding Careers
Almost always early on in any job, the learning curve is quite steep and then it flattens.
By the time you are over through the company’s onboarding plan which could be between one to two years at the same position, there’s often not much left to learn.
What then would keep your brains alive by staying at that same job for another 20 years?
Of course, you could be working in a rapidly changing work environment such as in Information Technology, but here too the exit rates are even higher than in most other industries.
If you switch jobs often, you are always being challenged to learn a lot. Job hoppers are seen to have a higher learning curve than stayers because they are often being placed outside of their comfort zones.
This is as true for office skills as well as industry-specific knowledge and the all-too necessary emotional intelligence.
Job hoppers joining new companies know they have to learn really fast, make impressions and appreciable improvements to the bottom line all within a few years before moving to the next challenge.
They are thus inclined to be overachievers and learn a lot in a short time helping them maintain passion in their chosen career paths.
The more you are forced into negotiating corporate hierarchies and office drama, the more likely you are to learn about people and become better at making interpersonal and professional decisions.
You Will Have A More Stable Career
A generation ago, workers could comfortably depend on an employer to provide career stability.
You would have to be really old or completely out of touch with reality to think that that kind of stability would be applicable today in the face of just-in-time hiring, layoffs, contract workers and downsizing.
Present-day career stability depends largely on you, which can be a scary thing to learn if you still hope to find that perfect employer.
You can create career stability just on your own if you believe in your abilities and have a good understanding of your career.
The key to this is networking. It is an established fact that the most efficient way to getting a job is through your network.
You are almost assured that you might need to find many jobs in your lifetime based on the current labor trends.
That is why you have to network as efficiently as possible because as research shows, a majority (over 70 percent) of people land jobs this way as compared to other routes.
People who have worked for many companies have a much larger network than those who stay with one employer for long periods.
In addition to this, as author Penelope Trunk argues, if you don’t change your job every few years, you do not develop skills that enable you to get jobs very quickly.
You stay completely dependent on your employer as if it were 1950 when you would have been gifted a gold watch once your 50-year tenure ends, Trunk cautions.
This is how job switching creates career stability.
Technology Evolves Quickly
If you intend to remain a top performer in your area of expertise, it goes without saying that you have to stay on top of emerging technologies.
Take for instance a Windows systems administrator who has stayed at a company for over seven years, if they were to start finding a job after this tenure, it is possible that entire software and hardware lines are absolutely foreign to them effectively boxing them up into limited career choices.
Thea Kelley, a San-Francisco-based job search and career coach narrates the tales of clients she has had previously working at a company using outdated technology under the false illusion that they would retire there.
When the axe finally fell they had a tough time searching for new opportunities.
She warns against allowing your skills and marketability to be frozen by holding to a job which is synonymous to riding a dinosaur without worrying about eventually turning into a caveman.
The Grass is Often Greener at a New Company
We might often find ourselves in a job situation where there’s barely any room for advancement or where we have hit a ceiling.
It is not unheard of either where managers dangle the possibility of a promotion in the near but unspecified future to keep an employee eager and deter exit when in reality that promotion may never come.
When this happens, it is always wise to look elsewhere.
This is in addition to the fact that job searching is actually a very rewarding learning experience in itself.
You will learn more about yourself, about the opportunities available beyond your organization as you expand your networks and keeps you agile and ready to jump ship.
Teri DePuy, a HR executive and career coach based in Colorado observes that career growth opportunities are more often than not found outside your existing employer. He advises, however, that this is based on correct timing.
WHY DO JOB-HOPPERS GET REWARDED MORE?
We have established that jumping ship can net you substantially more compensation as compared to being loyal and dedicated to your employer and waiting for a promotion or raise.
One answer lies in the incidence of recessions and how they allow businesses to freeze payrolls, but not just for the short-term as should be.
Media coverage of recessions and associated uncertainties have given employers the good excuse to shrink payrolls and lower salary expectations in the longer-term.
That is why the 3 percent average raise is now the new normal.
While this should affect both stayers and leavers, the difference is that a stayer is more bound by the company’s internal remuneration structures.
You start at a base salary and your annual raises are often calculated as a percentage of your base salary.
This is quite limiting in the sense that your manager can only bump your salary based on your base salary.
Another limiting factor is a cap on the number of promotions annually. You might be up for promotion but you have to wait much longer because of the queue caused by the limit.
If you switch companies, however, you have a good chance to command a higher base salary and you will find many companies would be willing to pay higher for the right talent.
Additionally, while your colleagues are waiting in line for a promotion, your resume may match a higher title at the new company and you can acquire it once employed.
REASONS FOR WANTING TO JUMP SHIP
While moving up the ladder and monetary compensation can be good reasons to wanting to move from your job, it is important to consider other factors.
Personal finance company LearnVest in an analysis of workers who have stayed long in one job observes that salaries often hit their plateau when employees are in their forties.
They note that getting a new opportunity starts becoming harder past forty five years of age. If you are approaching forty, this is probably the best to go for higher paying jobs and higher titles.
Have You Stopped Learning?
If you feel you are no longer learning new things at your current job then, or if you feel like you have learnt everything there is to learn at that job, it might be time to start looking elsewhere for more challenging work.
Tired of Working?
Your job is getting old if you are experiencing decreased productivity.
Maybe you find yourself spending more time on social media, accomplishing less than you used to on a working day putting off some tasks?
Your career progression will be greatly hurt if you cannot easily identify very recent accomplishments.
You cannot allow this to continue, and your best option is to move to a new job that will give you new challenges.
Has Your Income Stagnated?
If you find yourself in an organization that limits pay increase even for the very best of performers, you may have a better chance to increase your earnings by switching employers.
If you can demonstrate the value you have added to your past and current jobs, you will most likely bag a significant increase.
Find Yourself Always Complaining About Your Work?
If you cannot find anything positive to say about your current job or employer any more, you need to figure out if the dissatisfaction is caused by temporary, solvable factors or more enduring structural problems. If it’s the latter, then it is time to move on.
In a world where there’s an increasing ‘you are lucky you even have a job’ mentality, you could be forgiven for letting yourself be boxed up in a low-paying, unexciting job with little chance of advancement.
But as we have established changing your job every two to three years can have enormous advantages for your career and personal life.
You will gain invaluable skills in people management, have a more stable career, greater income and a solid network as compared to sticking to one company.
But the decision to move must be carefully evaluated against the chance of being labelled a job hopper, missing other valuable opportunities or miscalculating the upside.
Picking your future career is never easy and finding the right pick can be hard when you can’t know …