Eyeing another job just for the salary increase? Brace yourself, because there’s less green in those greener pastures.
Even as employers keep up the hiring spree, pay increases for new hires don’t appear to be keeping pace, according to ADP.
The payroll service giant bowled over expectations with data showing that private sector employers added 497,000 jobs in June. That’s more than double the forecast from economists polled by the Wall Street Journal.
But while that happened, job changers this month saw just over an 11% annual increase in median annual pay. Last June, they were pulling down a more than 16% increase in median annual pay.
People who stayed at their jobs had a more than 6% increase in median annual pay in June, down from 7.7% at the same time last year. Their median pay was $57,400, ADP said.
“People who stayed at their jobs had a 6%-plus increase in their median annual pay in June, down from 7.7% at the same time last year. Their median pay was $57,400, ADP said. ”
So there certainly can still be a monetary benefit for a new job. That benefit, however, has been thinning through the last year.
It’s the same story when you look at specific industries. Leisure and hospitality is the place where pay is growing the fastest, but even that is contracting.
Median year-over-year change in annual pay grew nearly 8% in June, but that’s down from nearly 17% in March, ADP’s data showed.
“Consumer-facing service industries had a strong June, aligning to push job creation higher than expected,” said Nela Richardson, ADP chief economist. “But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”
There are signs of a cooling job market, even if it might not show in the numbers of jobs added.
The slowing wage growth for job switchers also shows in Federal Reserve Bank of Atlanta data. Median wage growth for job switchers is 6.8%, compared to 8.5% last July, Atlanta Fed researchers said.
Also Thursday, data from the Bureau of Labor Statistics showed job listings falling to a two-month low of 9.8 million in May, down from 10.3 million in April. The record was 12 million job openings last year. The number of job quits hit 4 million in May, returning to that point for the first time in five months.
The pay incentives to jump ship may be less attractive. But it’s still a job seeker’s market, said Nick Bunker, Indeed Hiring Lab research director.
“The labor market isn’t always going to be this strong. Recessions happen. But for now, demand for new hires remains elevated and employers are still holding onto the workers they have,” he said.
There’s a number of ways a recession could still arrive, but for now at least it seems like a downturn will be averted. “This should be enough to give job seekers, employers and policymakers some comfort as the summer wears on,” Bunker said.
Of course, a job move purely for the higher salary allure can be tempting, but it has its risks.
What about the boss at the new gig? What about the rules for in-office and at-home work? What about job security for the new addition if layoffs arrive?
Another plan could be perfecting the pitch for a salary increase at the new job. One successful strategy for employees is highlighting their impacts and contributions, career experts say. Don’t, for instance, rely on inflation as a reason for a higher salary. The new boss won’t care. The message from Thursday’s ADP data? Think twice before you jump.