Why no one is getting big raises anymore
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- A Bank of America Institute report shows the median pay raise for job-to-job movers has cooled.
- Job switching has slowed from its Great Resignation era highs.
- Middle- and higher-income job seekers could "have somewhat less leverage," per the report.
Here's some less-than-great news if you're looking to job-hop because of your pay: People changing roles likely won't be getting as big of a wage bump as past job switchers.
"If you'd have done the same thing a year ago or 18 months ago, you'd have probably got double the pay rise you're going to get today," David Tinsley, senior economist at the Bank of America Institute, told Business Insider.
That takes away from one of the main ways people get raises overall: changing jobs for higher pay.
"You don't change jobs unless you get a pay rise, and firms will pay more for incoming people than they will for their existing employees," Tinsley said. "There's always that going on, but it does seem like there is a weakening in that premium right now."
A new Bank of America Institute report found the median pay gain for those switching jobs was around 20% during the Great Resignation in 2021 and 2022, based on the bank's internal data. However, the report said that "median pay raises appear to have moderated to around 10%" as of this past May.
"People are still moving, but at the same time, the pay rises they're getting are below pre-pandemic levels," Tinsley said. "That seems to suggest there's been a sort of supply shift."
He added, "the desire to move jobs might be outpacing the demand from firms to take people right now."
The Atlanta Fed's Wage Growth Tracker has also shown pay growth cooling for job switchers since the highs seen in the summer of 2022, based on the three-month moving average of median wage growth.
New data out Friday from the Bureau of Labor Statistics suggested wage growth for private employees generally has moderated slightly. Average hourly earnings rose by 3.9% from June 2023 to June 2024, following a year-over-year increase of 4.1% in May.
The drops in the median pay raise for job-to-job movers from 2022 to 2024 were felt across workers in all income groups, the Bank of America Institute found. Still, the report noted that lower-income Bank of America customers — those making under $50,000 a year — had the highest median pay gains. Meanwhile, the medians for middle- and higher-income job changers aren't even in the double digits anymore.
The report said that those middle- and upper-income job seekers may "have somewhat less leverage and bargaining power in negotiating a raise on taking a job."
Tinsley linked that drop to turbulence in some particularly high-paying sectors. "Obviously, there was a shakeout of jobs in tech and to some extent in finance last year, and I guess that has probably backed a little of the bargaining power out of those areas," Tinsley said.
The report also shows that job-hopping might be slowing down. Recent Bureau of Labor Statistics data also showed that the quits rate has consistently been 2.2% for seven months, and the quits level was around 3.5 million in May, far below its Great Resignation high of 4.5 million in April 2022.
Still, Tinsley said there still is a reasonable rate of job-to-job changes happening even with the pullback in raises. He said there's a risk and a reward when people change jobs. The risk, he explained, could be the track record you have to build up at your latest workplace, while the reward could be related to money.
The job-changing data implies there are still some optimistic job searchers in the still-strong labor market.
"Another way of thinking about it is if you move jobs and that job doesn't work out, are you confident that you could move jobs again? And when the labor market's in reasonable shape, then people will have that confidence, and that still seems to sort of be the case in our data," Tinsley said.
Have you made a job change, and how did the pay and benefits compare to your previous role? Are you an employer or recruiter finding job candidates' expectations for pay have changed? Reach out to this reporter to share at mhoff@businessinsider.com.