If you want to make more money, it's probably time to polish up your resume. Americans who changed jobs last year were more likely to get a pay raise big enough to beat inflation compared to workers who stayed put.
Among job switchers, 49% had wage growth that exceeded last year’s inflation, while the figure was only 42% for workers who kept the same job, according to a new report from the Federal Reserve Bank of Atlanta.
In 2019, there was a much smaller difference between the share of job switchers who had real wage growth (58%) and the share among people who didn't change jobs (56%).
Why it matters
The wider gap in 2022 indicates that switching jobs became more attractive and more worthwhile amid high inflation (which exceeded wage growth for most workers) and tight labor market conditions that have given job seekers leverage.
Many Americans have been losing purchasing power because their wages aren't keeping up with inflation. This can motivate workers to try to switch jobs for better pay — and for some people, the strategy is working. Here's a look at some of the relevant numbers from the new report:
- As of December, the typical U.S. adult had experienced 6.1% wage growth in the prior 12 months, which is near the highest level it has been in the past decade, according to the Atlanta Fed.
- For comparison, median wage growth was 3.6% in 2019. However, the annual inflation rate was only about 2% in 2019, which is far lower than the 6.5% rate in December 2022. That means median real wage growth for all workers was -0.4% at the end of 2022, whereas it was positive from 2011 up until inflation jumped in 2021.
- John Robertson, a senior policy adviser at the Atlanta Fed, notes that "older workers, as well as people staying in the same job, have seen the largest increase in the share of real wage losses in 2022 relative to before the COVID-19 pandemic."
Switching jobs helped Americans increase their wages in 2022. But even among Americans who changed jobs, most did not have real wage growth due to the rapid pace of inflation.