Switching jobs may be the only way to keep up with inflation
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In the hyper-competitive tech and finance job markets, the gap between new hires and existing employees is as high as 20%.?
So, if you’ve been at your company for more than a half a year or so, you’re relatively under-paid compared to the newbies.?
According to LaborIQ, estimates are that new hire salaries across all sectors is 7% higher, on average, compared to the median salary for those already employed in similar positions.?
For in demand tech roles like DevOps and Cloud Architects, that disparity is up to 22% in many cases.?
What this means is that loyal employees have been paying an unseen tax for sticking around.
How is this happening?
A phenomenon known as Salary Compression is at play, which means that the gap is narrowing between those with more experience at a company compared to those who are still new.?
When new employees get paid more, its called Salary Inversion. This is generally a bad sign for companies, as it causes major attrition among those who know the company best and results in tense company culture dynamics.?
So what’s the cost of staying??
Well, job switchers are getting an average of 5.6% more than a year earlier, compared to a 4.2% increase in salary for those that stayed.?
That’s a 1.4% gap - which is the highest since the dot-com boom in the early 2000s.
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Meanwhile, the price of inflation in the US is 5.2%. Canada’s inflation rate quickened even higher at 6.7% as of March 2022.?
The Gap by Role?
According to LaborIQ:
The median IT manager salary is $116,243. Companies need to offer $139,313 for new IT Managers - a gap of 20%.
This has led to crazy attrition - a record 4.5 million Americans quit their job in march 2022
What can employers do??
A must for any corporation, large or small is to quicken the pay audit cycle from annually to quarterly to avoid major attrition. Another option for consideration is offering mid-year bonuses (like Microsoft).?
Even previously unrivalled tech giants like Amazon have a 12% ‘regretted’ attrition rate - meaning employees they didn’t want to lose more than doubled last year. In fact, one Amazon AWS cloud unit saw 35% of engineers leave last year.
The biggest reasons for this mass exodus? Compensation and career development issues.?
Although it’s highly inconvenient for employers, the only way to avoid major attrition is to pay workers what they could make elsewhere.
Think you’re being underpaid? Get in touch with us at [email protected] and see what you are worth on the market.?