Why it Can Actually Pay to Change Jobs

The do’s and don’ts seem to be constantly changing when it comes to landing a job and cultivating your perfect career. Striking that perfect balance of longevity with a company and well-rounded experience can be a challenge. While loyalty to a company may have its pluses, you may not be doing yourself any favors when it comes to your salary. Findings suggest that changing jobs more frequently is actually financially savvy.

Remember 5% annual raises? You don’t see them much anymore. In fact, when the respected HR firm Buck Consultants released its 2013 employee compensation forecast, it projected that “the median salary increase in 2013 will be 3%” and that “the new normal for salary increases will settle at this 3% level.”1

Chances are, your most recent raise was on the order of 2-3%. While you are keeping up with consumer prices at that rate, you may not be making up for any financial steps you took backward as a result of the recession. Even the all-stars at your firm may be getting just a 5-6% yearly raise.

Why does jumping ship so often mean a jump in pay? As a senior hiring manager who has worked with Intuit and other Fortune 500 firms in the San Francisco Bay Area recently commented to Forbes, “I would often see resumes that only had a few years at each company. I found that the people who had switched companies usually commanded a higher salary.”2

“The problem with staying at a company forever,” she reflected, “is [that] you start with a base salary and usually annual raises are based on a percentage of your current salary. There is often a limit to how high your manager can bump you up … however, if you move to another company, you start fresh and can usually command a higher base salary to hire you.”2

In fact, Forbes contributor Cameron Keng notes that “staying employed at the same company for over two years on average is going to make you earn less over your lifetime by about 50% or more.”2

How does he reach this conclusion? He plots out a 10-year graph in which an employee starts at a salary of $100,000, assuming 3% annual raises and a “conservative” 10% increase in pay per job change. After 10 years at one employer and a decade of 3% raises, the extreme loyalist is earning $130,000. In contrast, a more opportunistic worker who changes jobs four times and works for five employers in those ten years will be earning about $170,000 a decade on.2

If you want change, when should you make your move? U.S. News & World Report recently addressed that question in its Jobs in 2020 web special. It cited several circumstances that might call for a job change:

  • You’ve worked for the same company for 10 years or longer
  • Your skill set is underappreciated
  • You find yourself battling your co-workers
  • Or your goals differ from the company’s goals.

If you’ve just come back from a vacation or wrapped up a major project, it might be a good time to make a change. If a fiscal year is just ending for your employer, this might be another prime time.3

On the other hand, there are bad times to change jobs, and USN&WR also noted some of those.

  • You’re overworked, having interpersonal issues at the office or just bored. You don’t want to overreact; restructuring your workday or work tasks may offer a solution.
  • A major life event, long vacation or house hunt is just ahead, a job change may not be ideal or smart.
  • If you sense that the economy (or your industry) is in line for a downturn
  • You’ve been at your job for less than a year.
  • Lastly, a job search that coincides with the holiday season may be more prolonged than you anticipate; HR officers and managers may be more available (and less stressed) when mid-January rolls around.3

If you love what you do and are good at it, you may see no reason to change jobs. Alternately, you might reason that you could excel and love your work even more in a new environment. Consider the above-mentioned factors (and others) if you are looking for greener grass.

Julie Newcomb, a Certified Financial Planner™ in Orange County, CA, specializes in financial planning for women.  As a wife, mom and business owner, Julie understands the pressures and challenges most women feel on a daily basis as they juggle many important priorities. Julie’s favorite thing about her job is the ability to give women peace of mind when they entrust her with their finances. To learn more about Julie Newcomb Financial, go to julienewcomb.com.


1 – tlnt.com/2012/11/08/remember-those-3-salary-increases-now-theyre-the-new-normal/ [11/8/12]

2 – forbes.com/sites/cameronkeng/2014/06/22/employees-that-stay-in-companies-longer-than-2-years-get-paid-50-less/2/ [6/22/14]

3 – money.usnews.com/money/careers/slideshows/the-10-best-times-to-switch-jobs [3/12/14]