Study: Those who swap jobs land biggest raises

Inflation-adjusted pay down over past year

WASHINGTON — Despite one of the best job markets in decades, workers across the U.S. economy are struggling with a common frustration: What does it take to get a decent raise?

It turns out you might have to quit your job.

Americans who leave their employers to take a new job are enjoying pay raises that are one-third larger than raises for workers who stay put, a gap that has reached the widest point since the Great Recession.

Also, retail and restaurant workers are receiving more generous raises than manufacturing workers.

And America’s CEOs are getting some of the biggest pay gains of all.

Nationally, average hourly pay rose 2.7 percent in July from a year earlier, before adjusting for inflation. The last time unemployment was this low, in the late 1990s, pay raises for Americans as a whole averaged roughly 4 percent.

And once inflation is factored in, average hourly pay has declined slightly over the past 12 months.

Switching jobs

In July, wages for job switchers grew 3.8 percent from a year earlier, compared with 2.9 percent for those who stayed put, according to data from the Federal Reserve Bank of Atlanta. In February and March this year, that gap reached 1.7 percentage points, the widest disparity since August 2001.

Yet the figures also illustrate how pay is still lagging compared with previous periods of brisk job growth. Even the pay gains for job-switchers are relatively modest compared with the past. Before the recession, job switchers received annual raises of nearly 5 percent. In the late 1990s, their raises topped 6 percent. Even adjusting for inflation, job switchers fared better in the late 1990s than they do now.

And for roughly three years now, average raises for workers who have stayed in their jobs have been stuck below 3 percent.

CEO pay

Even as workers have fared better, CEOs have done best.

In 2017, the chief executives of the 350 largest publicly traded U.S. companies reported, on average, an increase in compensation of nearly 18 percent, according to a report by the Economic Policy Institute. That compares with a raise of 0.3 percent for all other workers in the same industries. Both figures are adjusted for inflation.

Larry Mishel, senior economist at the EPI, said CEO pay jumped largely because it is closely tied to the health of the stock market. Most CEO pay comes in the form of stock options, which are much more lucrative in a rising market.

In 2017, the average large-company CEO made $18.9 million. That is 312 times the average pay of workers in the same industries, which reached $62,431 last year.

Top raises

In July, restaurants and bars handed out raises of 4 percent from a year earlier, before taking inflation into account. Pay for construction workers increased 3.2 percent. Retail workers’ pay grew 2.9 percent, slightly better than the average.

Yet for manufacturing workers, pay has risen 1.2 percent in the past year even as hiring has accelerated. U.S. factories are increasingly using temporary workers, who typically receive less pay.