How Quitting Your Job Could Help You Make More Money
Are you feeling undervalued in your position at work?
Full-time employees changing jobs get a higher raise than those who stay with the same company, according to the 2016 Workforce Vitality Report from ADP.
Employees who quit one full-time job and move to another a new one see an average 6% wage increase, compared with 4.6% for those who stayed in the same job.
Industry, Age, Tenure and Gender Matter
Unsurprisingly, a jump to a new company is significantly different depending on your age.
For employees 25-34, a new job means a 10% wage increase; while at 35-54, it’s only 4.9%; and just 2.2% for those 55 or older.
Similarly, how much time you spent at your last job influences how much of a raise you can get at a new one. Job hop too often or not often enough, and your prospects are far worse.
Those who spend two years or less at a previous job see only a 2.7% raise in a new job, Quartz reports. Stay 10 years or more, and the raise is just 2.2%.
The sweet spot for changing jobs is after three to five years. Full-time employees see a whopping 8.3% raise with a new employer after this time.
Stay six to nine years, and the average raise is still relatively good at 6%.
A little more surprising is the gender difference in wage growth.
In the same report for 2015, women showed overall greater wage growth than men. For women staying at the same job, wage growth was 6%, compared with 5.6% for men.
But men saw a much more significant jump in wages when switching jobs: a 10% increase, compared with 7.9% for women.
The difference might be related to types of employment. Female-dominated industries like education and healthcare show smaller raises for job-switchers than male-dominated industries like finance, information and business services.
Overall, most industries show a higher increase in wages for taking a new job. But these are the best industries for job-hopping:
- Leisure and Hospitality: 10.1% raise (vs. 5.7% for staying in place)
- Trade, Transportation and Utilities: 9.8% raise (vs. 4.3% for staying in place)
- Information: 7.5% raise (vs. 6.4% for staying in place)
- Finance and Real Estate: 6.7% raise (vs. 5.3% for staying in place)
In construction or manufacturing, you’re better off staying put and negotiating a raise. Employees in these industries get average raises about 1.5% higher when they stay put compared with job-hopping.
Employees know the benefits of quitting. Nearly 2.8 million employees voluntarily quit their jobs in January, up 17% from the year before, CNN Money reports.
This shows workers are more confident in their value.
When you know how much you’re worth and your employer knows you’re willing to leave if you don’t get it, you can be stronger in salary negotiations.
How to Know When to Quit Your Job
If you’ve been thinking about taking the leap, but are worried about throwing yourself into the uncertainty of a job hunt, this information could be just the push you need.
Job security is nice, of course. But these data show you could be missing out on better opportunities if you never make a leap.
Even if you’re satisfied with your job, you could use this trend to your advantage in salary negotiations. Read our story about how one IT professional got his boss to offer him a 45% raise after he started a hunt for a new job.
More generally, note that company loyalty isn’t always the most lucrative path anymore.
When you’re willing to demand what you’re worth -- and willing to leave over it -- you’re much more likely to get it.
Your Turn: Have you considered changing jobs for higher pay?
Dana Sitar (@danasitar) is a senior writer at The Penny Hoarder. She’s written for Huffington Post, Entrepreneur.com, Writer’s Digest and more, attempting humor wherever it’s allowed (and sometimes where it’s not).