A better job might not mean a better salary
Right now should be a good time to look for a new job. Unemployment is down to 3.8%, and, according to a number of other metrics, the job market is healthy.
Except for pay.
Data shows that wage growth is dragging, even as the jobless rate bottoms out and the economy expands. Sure, median pay in the United States is ticking up, but not by much. It rose to $52,672 in February—an increase of just 1.3% compared with last year, according to a report from the job-search website Glassdoor. That’s down from a 2% year-over-year increase in January. From 1979 to 2016, even as inflation-adjusted wages for the top fifth of earners grew more than 27%, wages for workers at the bottom of the pay scale actually dropped, while middle-class wages grew less than 4%.
What gives? And what are some work-arounds to improve your income in this climate?
“The unemployment rate has overstated the strength of the labor market,” said Elise Gould, a senior economist at the liberal-leaning Economic Policy Institute, in a phone interview. That’s because so many workers were sidelined by the Great Recession for so long that they are not even counted in the unemployment stats anymore.
And there are longer-term factors. “Workers have lost a fair amount of bargaining power,” Gould said, due to weakened labor unions and growing concentrations of wealth at the top. The aging of the workforce also may play a role, because wage growth tends to be steeper for younger workers, according to John Robertson of the Federal Reserve Bank of Atlanta.
All of this is bleak news. But, Gould said, “I’m optimistic.” Although wage growth is still lethargic, she believes the economic recovery is likely to continue moving (slowly) in the right direction. But some economists argue that a more robust fix would entail policy changes, such as the strengthening of labor laws.
But you don’t have time to wait for big fixes. What are your options?
First of all, don’t let the cumulative nationwide data dissuade you from your own quest for better pay. Each situation is different. All things considered, “this is still a good time for workers to look for a new job,” Glassdoor’s Daniel Zhao told CNBC.com. “If they can find a job that fits them and pays well, they should go for it.”
Ask for a raise
Really. If you think it’s time for the boss to up your salary, go about it thoughtfully. When you look for a new job, always try to negotiate your salary before starting. But, no promises. “The recession went on so long that employers are used to offering the lowest possible wage,” Gould said. “Employees are feeling lucky to get a job at all. They’re not pushing it.” But it’s worth trying, given that any future raises will be based on this starting number. This is especially important for young women starting their careers.
People who switched jobs recently saw about one percentage point more wage growth than people who stayed in their jobs. In fact, job-hopping is a classic way to get a wage boost. This may be why more Americans have been quitting their jobs recently.
Wages aren’t going to recover overnight, and some employers might not be motivated to move on them. If you’ve tried your best and hit a dead end, keep in mind that wages are just one factor in overall job satisfaction. If a new job, transfer, or promotion offers a better quality of life, great benefits, more interesting responsibilities, or a mission that closely aligns with your values—or even just a shorter commute—those factors might make up for a minimal wage bump. Make sure you’re looking at the whole picture as you make your decisions.