Staying Put Can Hurt Your Lifetime Earnings

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It wasn’t uncommon for members of previous generations to start and end their careers at the same place, never once switching employers. We’ve all heard the stories of employees who started in the mailroom or the factory floor and worked their way up to CEO. Upward mobility of that nature is rare today. Most people find they need to change employers to substantially advance their careers.

But career growth isn’t the only reason to keep moving. Compensation is a major motivator for switching jobs. In fact, cumulative earnings can be negatively impacted by staying put with the same employer.

Forbes estimates that employees who stay at a company for longer than two years will make 50% less over the lifetime of their career. Most companies give compensation increases of only 2-3% each year. Switching companies provides an opportunity for you to negotiate a higher salary and to be appreciated for the skills you have acquired over time.

Do you have to switch jobs to get a significant compensation increase? Not always. Some companies are good at making sure they not only develop their employees, but also compensate them fairly for their increased knowledge and responsibilities. But those companies are rare and that might be the slower path to advancement.

If it takes you five years to advance from coordinator to manager at a company you joined right out of college, you may be able to make that jump in three years by changing companies and command a higher salary at the same time.

If a starting salary is $40,000 and you are fortunate enough to get the high-end increase of 3%, you will still be earning under $44,000 three years later. Ask anyone who has sat across from a manager at performance review time receiving a measly jump in salary year after year. The heart-sinking news can be upsetting and also demotivating.

One problem lies outside of the restrictions companies place on the allotment of annual increase percentages. Managers often fail to see the level of growth an employee has achieved or won’t go to bat to secure a higher bump in salary for top talent. High performers won’t stay in one place for long. They’re smart. That’s one of the reasons they’re high performers to begin with. They’re astute enough to know their value and keep moving.

Job hopping on a resume isn’t always advisable when changing jobs happens every year, but it’s more the norm and not the exception to see two-year stints on the resumes of high potential talent.

 

 

 

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