>Why does this seem to be the case?

Mostly for this reason:

>I'd also feel insecure jumping around

Lots of people can't or don't want to move, so companies generally don't need to pay current employees as much to stay as it would take to get someone new to come aboard.

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While there are exceptions out there....

You're a commodity.

You are replaceable.

I will hire the one who is willing to do the work the cheapest.

I have no need for loyalty.

I would just replace you with the next person who is willing to work for less pay.

I will tell you that loyalty is important. I will tell you that you are family. I will tell you that you are important.

This is all to keep your wages stagnant and discourage you from seeking other opportunities.

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It's actually pretty remarkable that companies are still operating under the mindset that they can get away with 2-3% raises and not lose a lot of talent. The days of decades-long tenure at companies is mostly gone unless someone a) really loves their company/work and/or b) has no other options.

EDIT: This theory isn’t accurate, or at least doesn’t tell the whole story. Thanks for explaining, everyone!

Tangentially related, I have a theory that is often overlooked that may account for a good chunk of long employment tenure that was common in the past. After the ACA (Obamacare) became law, it forbade insurance companies from denying coverage for someone with pre-existing conditions. If I understand this correctly, it would mean that if someone worked for Company A, had their insurance, then developed a chronic condition, they could be denied coverage at Company B's insurance plan if they switched companies. Maybe that's not the case, but if it is, that would explain why so many people stayed at companies they hated or that underpaid them; they were essentially stuck there unless they wanted to go without medical insurance.

Doesn’t this kind of make logical sense? If a company wants to hire you, they’re going to have to offer a compelling reason. If I’m content with my job, I’m. It leaving for a 10% raise. Heck, I don’t think I’d leave for a 20% raise.

I do however think employers can retain employees with a combination of benefits. If you have a good salary package, then combine with extremely flexible work schedules and good benefits, you don’t need to offer over the moon raises yearly.

Some MBA out there has done the math that the company comes out ahead if X% of people leave because of pay vs paying everyone what they are worth.

They will evaluate the cost to replace vs retain individuals as they are on their way out the door.

Until it starts hurting the bottom line it won’t change.

>Why is the current system like this?

The bottom line? There aren't enough people job hopping every few years to make it costly enough for companies to drop the old paradigm. I think we're maybe approaching a tipping point though, the lifetime commitment to an employer is definitely more prevalent in older generations. As those people leave the workforce I think it will become too costly for companies to not change, at least a little.

It's pretty typical that that's the best way to get paid the most the quickest. But it actually is also possible to stay and still get paid well.

I've been tracking my total comp since I started and on average I've gotten a 9.4% raise each year. Some years lower (looking at you 2009 where I actually went negative YoY but lol at finding a new job), some years higher, but that's the average I've had from sticking with the same company for the last 16 years. I have of course gotten lots of interest from other companies but either the new job sounds worse or they can't significantly (>20%) beat my current salary at the time so I stay put because I still really like my job and my coworkers and location. Also the same reason many of my coworkers are also still here even longer than I have.

Anyways as long as you're semi-regularly checking to make sure you're still being paid well compared to jumping companies, then it's not necessarily inevitable you'll get paid less, but I'll admit I'm probably more of an outlier.

And FWIW people have been saying "20 years at the same company days are now over" since the 1990's so it hasn't been true for a long long time.

I spent 15 years (non consecutive) at megabanks and people just get so warm and cozy with the job security that they don't even think about leaving.

The companies 100% take advantage of this and if you do that I guarantee you are significantly underpaid.

I would tell people about my experiences leaving and coming back and upping my pay 50 or more percent and they just stared at me and collected their 2% and continued on with their day.

I've been working at the same company for 17 years now. Love my job, love my coworkers, been working from home that entire 17 years. They'll have to fire my ass to get rid of me.

Edit: I should note I went from I think it was 75k to close to 250k in that timeframe.

I've even boomeranged back to the same company over a seven year period with ~90% salary increase.

Fortune favors the bold. You have to be willing to take chances, not sell yourself short and be shooting for the next highest position. And try never to burn any bridges.

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>I feel like it cant look good on my resume and hiring mangers would eventually become skeptical

Yes it’s common in certain industries and you shouldn’t be rejected out of hand for it. Remember some careers in some industries can be characterized by lots of networking and job-hopping to follow people you’ve worked with or to take talent with you. For some reason in the tech field (in my experience), job hopping can be a little more organic than just independently leaving a job and getting a completely new one on your own. Groups and teams of like-minded colleagues/friends can migrate together especially when the job market was a little softer. Associates might concieve their own companies and ideas and get others to join them, etc. There are often interesting stories behind a choppy work history that go beyond just applying for different jobs and leaving a place. If you think about it traditionally then it looks worse on paper.

I have been told you can also apply for jobs you don't intend to take and leverage a raise at your current company.

Does anyone have experience doing this? How does it usually work out?

This was the case when I worked in banking. It's like being punished for being loyal and true, which are the things companies tell their employees they value "cause we're like a family" only to discover that families grow apart too.

So long as you contribute to your own retirement and fund your emergency and fun accounts, you'll be fine accepting this reality of life.

This only works for a while. Eventually ageism catches up and future employers see a declining employee who cannot commit and then they opt for the younger 20s 30s guy who is still trying to prove themselves making significantly less money

Am engineer. Can confirm. Things that I can't prove definitively contribute to this in engineering but pretty sure do to one extent or another.

• pensions. We used to have them. Now most don't. 401k is portable. Companies never adjusted to a guy wanting to stick around for the pension.

• hr/recruitment. They get paid more and have more work if there is more change. So they don't let raises get to high and then obfuscate the costs of bringing a replacement in (starting out inefficiency, cost of hr/recruitment, etc.)

• safeness. The thing you describe as feeling insecure and wanting to "commit" to a company. They know they will keep some % of the people like you. At a discount. So it helps balance the books. (don't get me wrong. I think after my last move I am going to be like you too. I make enough that I can be comfortable and live within my means and so the extra $ isn't as big a factor.)

On top of what everyone else said, I think another reason is that companies always think outside people are smarter/better than the current employees they have. Probably because everyone puts on their best performance when interviewing for a job.

There is probably some kind of psychological basis for it, like a grass is greener syndrome.

>Why is the current system like this?

because for every person who job hops aggressively for higher salary you have significantly more people not willing to get out of their comfort zone/take risks/prioritizing stability for their family who the company can effectively give pay cuts relative to inflation year over year.

Electrical/computer/software engineer here. Hopped jobs earlier this year after just under 3 yrs at my previous company. 50% raise. Would recommend.

I'm an engineer who spent 18 years at my last company and will be at my second/current one until I retire, so let me offer my thoughts since we seem similar.

There's nothing wrong with staying with a company, provided you're paid what your worth (and like the job of course). If you have a good manager and/or stick up for yourself, that shouldn't be an issue. If someone gets paid more going to a new job, either they weren't getting paid enough before, or they're agreeing to more accountability and responsibility at their new job. The job offers I got when I switched were right around my then-current salary, and that was expected, because I had a good manager. I've never asked for a raise but have gotten one every year (two this year, thanks to inflation!)^1. I've never asked for a promotion either, but have gotten those as well.

And I can play the "what if" game all I want, but I know this: my current salary is consummate with my experience and skill. If I scored 10%-25% increases by job-hopping, there's no way I could be doing what I'm doing now (real engineering, minor project management), because my $250k salary (or whatever) would mean I'd be spending all day going over budgets, leading multiple team meetings, dealing with customers at a high level, and trying to turn little KPI icons green. No thanks.

^1 If you care, median is 4.0%, mean is 5.86%. These were 4.9% and 7.0% for my first job; my new job offers lower raises which I knew about going in, but they make it up in great retirement benefits.

The way companies work has totally changed.

Back in the day when someone retired, quite or resigned the person "below" them would move up and the person "below" that person would move and so on. This system proved poor because now there is a new inexperienced person at every level of the company.

But companies realized that it was better to just hire someone from outside the company. That way not only do you not create a "crack" in the company pyramid, you also get to steal talent from a competitor.

So there is little to no reason to promote from within the company.

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I've personally gone through this. I'm an engineer too. I worked at a company for about 6 years and was offered a position by another company while still being employed. I was getting paid very well at my first company. I was actually getting paid close to some senior salary. I thought I hadit made for myself.

The new company called me in for an interview and ended up offering much more money and far better benefits. The former company was willing too match on every aspect. I couldn't sleep for days trying to come up with a decision. I ended up leaving to my current company.

I am immensely better here: better pay, commute, benefits, bonus, etc. This job has literally changed my life. I'm now seeing I can comfortably retire early. A friend of mine stayed at the previous company, 4 years later there hasn't been a day when I have thought I'd be better if I'd stayed. You'll have to show you're worth your salary wherever you go though. Not necessarily staying late all the time but by producing high quality work.

This isn't true in every sector. Reddit is tech-heavy, and they seem to think all the world is like them. In certain fields this is true, others not so much.

I would say that people shouldn't automatically default to that thought process though. If you find a company that rewards its employees or values your contributions, don't assume you HAVE to leave. And, as you go further in your career, short term stops will eventually be career limiting.

I've seen the job hops work out but I've also benefited from growing within a company. People should keep their eyes open for a company that values their contributions and rewards it versus purely job hopping as the only path to victory.

Later in a career, you could job hop to get more comp but then you'll cap yourself out at being able to move up to more leadership positions because you don't have the cv to back it up.

What no one tells you this works both ways. You are a commodity and your value can drop too. But no one says that.

I think it's two fold for major corporations.

• Companies want some turnover. Employees aren't all equal and retention efforts are targeted at top performers. This means the majority of workers simply don't see it. If you land in the bottom 15% of performers (this number is arbitrary), they likely want you to job hop for your raise.

• Employees typically have a number that acts as a catalyst to change jobs. Companies don't need to pay the same to retain employees as to attract employees. To attract new talent, you have to pay 10-20% more than their current role. This same approach is used by insurance agencies and paid services; they dont need to beat other offers, just be close enough to avoid the catalyst number.

My personal experience is that I stayed at my first big job for a decade. I would have made more in the short term hopping, but the experience and training I got from constant promotion and training was more valuable IMO. I did finally leave when I became unhappy because of leadership changes after my salary was tripled (35k - $125k) in my tenure. Finding a new job was easy and in two years with new jos I've seen another 90% growth. This wouldn't have been achievable without the opportunities offered through my long tenure (building new teams, managing practices, unreasonably expensive certifications). IMO you should seek active professional growth and then expect compensation. There is some delay between growth and comp, but it all works out in the end.

Not always true though, I know people who are 15+ at the same company and it comes with a lot of perks. Still competitive salary but lots of vacation time, flexibility, connections within the organisation etc

Work in finance and it’s certainly the case here. Stay somewhere 3-5 years (5 being the MAX) then either get a large promotion at your existing company or jump to a new company. I got a 50% (not exaggerating) raise when I took my current job. When I move to my next gig I expect it will also fall in the 30-50% increase range. But it’s not automatic, I’m increasing my knowledge and skillset in the time I’m here to make me qualified for those types of bumps.

I can also say that in our budgeting for 2023, we’re factoring an average 5% raise for everyone next year, knowing that a lot of people won’t be happy with that and will leave. It’s just the cycle of how things are these days. You keep and promote your best people, the ones that don’t get promoted will leave and be replaced with someone (probably cheaper) then the cycle repeats.

Is this actually a new trend or is it just infinitely easier to notice because everything is online? Actual question because I really don't know the answer but I bet it's not not a factor.

In 1992, you couldn't randomly click through a dozen job boards and anonymously see what's going on in a matter of seconds. You'd have to spend a decent chunk of time actively seeking this info: calling specific places to ask, going to a business in person, telling other people that you want to know about job openings. There were want ads in the paper but they were nowhere near as robust as what you get by simply typing "veterinarian jobs" into Google, and newspapers were geographically specific. You wouldn't see openings from all over the country like you can with online job boards now, either.

It's ALWAYS been like this, especially in IT/ software development. I have had to leave to get career advancement and payrise every time.

It's a hassle to find a new job, create a new commute or move you and whatever family you have and lose friends, I think employers prefer to risk you being afraid of these challenges to not pay more, and would rather risk the chance of getting a guy who performs really well cause he's new but doesn't know what he's worth so takes a garbage deal.

It's the same in IT, one of the first things my husband's coworker told him was to stay a year and than jump, do that for a few years than settle, the pay is so much better by doing this. I personally think it's not too bad an idea either cause it proves to yourself you don't need to be afraid of losing your job so you don't get taken advantage of, you learn different qualities of work and know when you've found a good fit rather than being told it is.

Personal anecdote here. I've increased my salary nearly 90% in the last 6 years by job hopping twice. It would've taken me 15-20 years at the first job to make what I am now. It is what it is.

This is not a personal finance question, so maybe not the best forum for it, but...

> I on the other-hand like committing to a company.

That works out great if the company is also committed to you. Part of that committment on their end is paying you and growing your career.

> I feel like it cant look good on my resume and hiring mangers would eventually become skeptical....right?

Depends on the industry. A generation ago, you would have been correct. Now, in many sectors, its nearly the opposite and switching every few years is the norm. Might be a red flag if somebody stays at the same company for 10 years with not much growth.

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I think job hopping for salary increases is a byproduct of companies being unwilling to pay employees more.

Companies don't want to reward long time employees with money. They are more interested/beholden to their shareholders.

If companies regularly provided more than just cost of living raises, improved working conditions, etc they would have more worker retention. But as it stands, the best way an employer can tell a company that they are undervalued is to (threaten) to leave. Otherwise you keep improving, but your paycheck stays the same. You can ask for a promotion, but unless they think they'll lose you, they have no monetary incentive to give you that raise. And that's when you get employees strung along. As one redditor put it, a promotion delayed is a promotion denied.

TL;DR: Companies don't want to pay employees more, so employees find other companies that will.

I mean my company makes it pretty hard to leave. Pay is slightly above average for the reason. Healthcare is very affordable. I only work 4 days a week. PTO rolls over and new employees start with 35 days. We have a pension plan. I’m salaried but if I pick up someone shift on my day off I’m paid for the extra hours at my hourly rate, yet I’m not docked if I work under 40 hours.

Thats exactly how the restaurant industry is amongst many others id imagine

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When you think of workers as a distribution of motivation and attractiveness, you'll have varying distributions depending on industry, and for most, you can probably get away with small raises and not have that much turnover.

However, you want to reward the high performers more, but it can't be so much that other workers resent that amount, which leads to lower increases overall. Other companies want to hire better people, so they need to increase the total comp to compete.

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For the most part, it does seem more "profitable" to jump companies on a regular basis for the pay increases. A friend doubled his salary in one year by jumping twice, but then again, he's in a high demand position.

I've been lucky enough to stay with a private company for a good chunk of my career and am set for a comfy retirement. I wouldn't mind doubling my salary, but I don't NEED it. Helps to be single with no kids, though.

You are essentially trading stability and safety for money in most cases.

I know this is reddit and corporations only care about themselves blah blah blah, but you always try the hardest to save the folks who are ingrained in the system, have long standing relationships with other people, know all of the crazy nuances and culture, have that one piece of useful knowledge that saves the day every other year or so, etc when cuts come around.

in MOST fields, 3 years really isn't enough to get yourself in that spot.

Reddit is a bit IT\IS heavy if i had to guess when it comes to careers, and rules are somewhat different there. You don't want to get caught in a place where technology and your skills stagnate. Some little project you worked on at your current job may now give you the push to go for higher pay at someplace else where that is the MAIN job, etc.

As someone who was a hiring manager, you liked seeing nice stretches at a previous job, vs the 2-3 year flips. Ideally you saw a little bit of both...."I was with the company 8 years....everything was great, but i didn't see a direction for me for some time moving forward..."

Hiring someone who you knew would start shopping around in 2 years was always a strike against you, because if you aren't a mom and pop, hiring\firing someone is a giant pain in the ass, expensive, and a time suck, and if you get it wrong, you can fuck up existing stuff that works.

The downside to jumping around like that can be missing out on equity grants (options, RSUs, etc). Depending on the company, you could be leaving a lot of money on the table.

Not new, welcome to working 1998+.

The only big change from previous generations was the removal of pensions.

For previous generations, the goal was to get into a big company and stay there til retirement because of the pension plan. So while your annual raise was low, you were tied to a pension that grew. Trading short term cash for long term cash.

Now, there are no pensions and ppl about to claim them are top of the list for layoffs. 2008 was a massive dick kick yo those just a few years from collecting their pensions.

What did that change?

Now, you do 2-4 years at a company and move on unless actual upward mobility is happening. Even then, you get 1 year with the new title then go get a 20% bump by going to a new org unless your company will pay market rates vs sticking to internal pay raise limits (ATT as an example of chasing talent away).

I was at an org for 10 years because I was moving up and laterally into a career i loved. But within 4 years of leaving, i doubled my income by going to 3 different orgs. It was uncomfortable change, but can't argue with the results.

Plus, discomfort cultivates growth.

Most humans are pre disposed to sunk cost fallacy thinking.

They hope and bet on you being afraid of the insecurity of a new role.

But you’ll notice they don’t offer pensions anymore. There’s no benefits to staying at one place. And the only real motivation to moving slowly between employers is so that your resume doesn’t look jumpy.

If you’re fine earning less - then stay. Earnings isn’t everyone’s motivation. But in 10yrs I anticipate you’ll find your compensation well behind the curve of your experience.

The other side of this is exposure- I’d wager your in tech - your technical exposure will change if you move around. If you are comfortable staying in one place- that’s cool but it might make it harder to find your skillset down the line.

That all being said… employment isn’t always about money and if you feel better staying in one place, thats a good decision for you.

Really frustrating, I love my job role, love the company but I'm definitely underpaid.

Personally, I have nearly doubled my salary every time I've moved. Financially, I would be nowhere near where I am today if I had committed to one company. First job out of school (as a master's graduate), I made $14.50/hr at a major research institution as a researcher. Jumped to $90k a year later at a major healthcare company. Jumped to $175k 3 years later at a consulting firm. A colleague I worked with at the first school I worked for, also with a master's who started just after me is making $43k. I know this sounds like a brag, but it is clear to me that switching companies is far better in terms of earnings - at least in my industry.

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Its common for nearly any role and level. Change companies for biggest raises and fastest career progression.

I work in finance communications and job hopped every 1.5-2 years since college, progressing far more than the raises I received at any company. I have been with my current company only because they reward well internally and promote/progress people.

Been with my company for about 2.5 years, received a promotion earlier this year and likely to get a good pay bump next month as well. Have moved from $100K at the start of COVID up to likely $135K. I know I can get a bigger salary if I move to another company closer to $175k+, but I can make more than that if I stay put at my agency.... I also work about 30-35 hours a week and leave at noon every Friday.

Yeah but that may not be the best for your retirement. Kind of a short term gain vs. long term goals kind of thing.

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This post has been removed because we don't allow career path or school choice questions (rule 9). Other subreddits are better equipped to address this topic:

• /r/FindAPath is a place for figuring out what you want to do (both career and college major).

• /r/CareerGuidance is a place for individuals to ask questions and get advice about their careers.

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If you have questions about this removal, please message the moderators.

My dad worked for over a decade and a half at the headquarters of the same major retailer and they tossed him aside and rehired him at a demotion after months of unemployment.

He's doing well for himself, but learned a valuable lesson. Never be loyal to the org because they sure as heck won't be loyal to you.

Some companies do not allow 401k contributions for a few months after hire. Perhaps this can be negotiated, but it might make it more difficult to maximize pre-tax contributions.

The 3rd option is to do interviews every 2 years to gauge your worth and make sure your salary is keeping up. Then bring that data to your boss and ask for a comparable rate. It won’t be as much, but you get to stay at the place you like, you’ll get a good salary or improved benefits depending on how you negotiate, and you’ll have knowledge that will give you a better sense of your value and skillset compared to what’s out there.

I like this method because the lack of pressure to leave also means the jobs I test for are jobs or campanies I really want to go to. Sometimes I learn the grass isn’t always greener, but sometimes it really is. Then hoping is easy.

It's like this because of short-sighted profit obsessions.

Employers literally think, "Why should I give them raises if they're already here willingly working for their current wage?"

They extend better offers to new hires because no one will start a job for what they're currently paying people. Most of those people are in a position where they feel trapped. They don't have the savings (or are too risk averse) to move somewhere for a new job, they have leases, medical issues for which they fear a period without insurance (which is why insurance should not be tied to employment). And so on and so forth.

The result is a loss of talent, but since higher-ups so often believe themselves to be the only true talent, they rarely fear that.

I’m a retired engineer, started working in 1989. I spent 5+ years at my first job before they offered money to quit. I started my service job after about 6 months I used as a vacation with a promotion and a 40% raise. 3 years later I started at my last job, they wanted engineers to start so the raises matched salary increases of new hires. I retired on disability in 07, I maxed out the disability insurance with my January raise, retired in March.

A friend started at our first job. He was making half my salary when I retired even though he was making 30% more when I quit.

I think some companies are like my last one, posting the replacement cost to employees, this is great for “skilled” employees. It’s horrible for the unskilled staff. The cleaning crew didn’t turn over much until the third round of pay cuts. They found the minimum required to get people to accept the job. I guess that’s capitalism but I didn’t like it.

It's unfortunately true that many companies are much more willing to offer money to lure new employees, than they are to incentivize existing employees to stay. Once you're working for them, they figure they don't have to woo you anymore.

So definitely jumping around a lot is a way to increase your salary in a lot of fields today.

The public sector is one of the few places that still functions the old way. You will never get the same pay that you do in the private sector - especially if you're in a highly skilled field - but everything is set up to retain people. There tends to be a more-regular progression in salary, at least to an upper limit. And the pensions are set up to improve as you accumulate service credits, and will often include bumps at certain milestones.