Job Switch Pay Bumps Shrink, Except for Top Earners
Switching jobs used to result in significant pay increases, but the landscape has shifted in recent years. Despite this, workers who make the move still tend to be in a better position financially than those who remain in their current roles.
However, the top 5% of earners often fare better by staying put rather than switching jobs.
According to a recent report from Bank of America, individuals who changed jobs in the first quarter of 2026 saw median wage increases of 8% compared to the previous year. This outperformed the 5% increase observed among those who chose to stay in their current positions, although the gap between the two groups has narrowed compared to previous years.
In the current job market, employers are not facing significant pressure to offer higher wages to attract talent. Joe Wadford, an economist at Bank of America, described the environment as “low-hire, low-fire,” indicating a lower rate of turnover and less incentive to pay a premium to job switchers.
For the highest-paid 5% of earners, the wage increase for those who stayed in their jobs was nearly 10%, while job switchers experienced a less than 2% improvement in wages, according to the report.
“Loyalty appears to be more rewarding for this group,” Wadford noted.
On the other hand, individuals in other income brackets typically earn more by switching jobs rather than staying in their current roles.
Job Switching: A Potentially Rewarding but Less Guaranteed Strategy
The financial benefits of switching jobs can provide insights into the current labor market dynamics. The peak year for job switching in recent memory was 2022 during the pandemic-induced labor shortage. At that time, job switchers enjoyed 18% wage increases, while job stayers received 7% raises, as per the report.
The period from 2021 to 2023 saw a surge in resignations, known as the Great Resignation, as workers sought better opportunities and employers improved offers to fill vacancies.
It remains uncertain whether the trend of job switching for higher pay will resurface. Bank of America’s data indicates a slight increase in job switching over the past year, with 13.5% of workers changing jobs in the first quarter of 2026, up from 12.9% the previous year.
Youthful workers tend to benefit the most from changing companies, with Millennials and Gen Z experiencing accelerated wage growth compared to their counterparts who remain in their current roles. However, this trend has slowed alongside the broader labor market slowdown in recent years.
In April, the unemployment rate stood at 4.3%, a rise from the record low of 3.4% in January 2023.
Recent Consumer Price Index (CPI) data for April indicated that inflation is surpassing wage growth for the first time in three years. While job switching may not guarantee substantial financial gains as in the past, individuals facing rising living costs and stagnant wages may find it worthwhile to explore new opportunities in their field.
