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Talent Talk: Is the Workforce Cashing In?

Image courtesy of Alamy/Klaus Ohlenschlaeger coins representing rising income
US government data show that 60% of workers who switched jobs saw an immediate increase in real earnings, which factor in the inflation rate, so these workers are getting raises in the 10% or greater range.

About two years ago, Talent Talk ran a three-part series that discussed the main reasons professionals make job changes. To summarize, here was our list of the top six reasons:

  • Lack of a clear career path
  • Leaving a poor leadership team
  • Company culture is toxic or not a good fit
  • Personal needs are not being met
  • Compensation, benefits, and stability
  • Need to relocate, usually for family reasons

We also noted that these motivations can change over time. For example, following WWII, compensation, benefits, and stability were number one.

There is not much evidence that a fundamental long-term shift is happening, with the caveat that long-term shifts often are not readily apparent while they are occurring. There are, however, data that suggest short-term imbalances in our labor systems are driving different motivations right now.

The Great Resignation that first became “a thing” in 2021 has continued into 2022, with quit rates in the manufacturing sector at their highest levels in about 50 years. If the Q1 2022 numbers are extrapolated for a full year, this would amount to a 30% turnover of the workforce. In fact, that would be a conservative estimate because it assumes that no one changes jobs more than once during the year.

While this phenomenon is happening, a recent Pew Research Center analysis of US government data shows that 60% of workers who switched jobs saw an immediate increase in real earnings. Real earnings factor in the inflation rate, so this means these workers are getting raises in the 10% or greater range.

This is not an apples-to-apples comparison because not all workers who quit re-enter the workforce right away. But if you consider the number of workers quitting their jobs who also get a big increase in pay at their next job, we at least have circumstantial evidence of a cause-and-effect relationship.

Looking back at our top six list of reasons that professionals change jobs, the other five do not necessarily come with significant compensation increases. We may be seeing a trend toward employees taking this opportunity to make a move primarily for a pay increase.


About the author

Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at [email protected].

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