Fancy Title, Higher Pay, Average Applicant
As part of the Great Resignation, over 20 million workers quit their jobs in the second half of 2021 alone. And while that may have been the big story a couple of years ago, the numbers show that for those willing to make the switch, many companies have been sweetening the deal more than they have in the past. “You would expect job switchers to see high growth in a tight labor market, and the wage growth for job switchers reflects that expectation” says Nela Richardson, ADP’s Chief Economist.
The typical worker who changed jobs between April 2021 and March 2022 saw earnings jump by 9.7% from a year earlier, after accounting for inflation, according to the Pew Research Center.
The typical worker who stayed in their position saw wages fall 1.7% after inflation.
And as job hopping has grown in popularity, younger employees have come to expect fancy titles far earlier than previous generations. They also expect to get promoted more frequently, which inflates titles even faster. The biggest problem with title inflation is that puffed-up titles don’t actually attract better talent. Employees are expecting higher salaries and fancier titles with junior-level experience. When JobSage, an employer-review site, surveyed workers last year, 58% of Gen Z respondents said they expect to be promoted every 18 months, compared with 20% of baby boomers and 27% of Gen Xers. Gen Z workers also estimated that it takes a mere three to six years to become a vice president. Boomers, by contrast, said becoming a VP requires a decade or more of experience.
And with the taboo around disclosing one’s pay pretty much dissipated, particularly among younger workers, everyone in an office eventually finds out who got a hefty pay raise for joining the firm or threatening to walk. A potential solution involves giving one-time bonuses to loyal employees rather than raising their salaries outright or reviewing salaries more than the traditional once a year — to provide more hope and motivation for those on the lower side of the gap. Experts warn that if companies aren’t careful, they could end up busting their compensation budgets or creating massive pay equity issues — or both.