The wage growth gap between job hoppers and job stayers has shrunk dramatically in recent years. Here’s how to recalibrate your recruiting and retention strategies.

The financial incentive for U.S. workers to hopscotch from job to job to collect more generous starting salaries has hit the skids this year. For the first time in a decade, it pays nearly as well for people to stay put in their current jobs and aim for annual merit increases than it does to jump ship for a different role.

As the allure of the job-switching pay premium fades, CHROs are adjusting their recruiting and retention strategies to meet this new reality. Rather than focusing on luring candidates with higher starting pay, HR leaders will increasingly showcase the long-term value of internal growth opportunities, skill-building initiatives, and internal mobility programs.

Wage Growth Declines for Job Switchers

The ability to “hop to the top” of pay scales is not over, but the cooling labor market is giving fewer financial incentives for people to leave their jobs for greener-pay pastures.

In the first two months of this year, people who switched jobs increased their wages by 4.8%, according to data from the Federal Reserve Bank of Atlanta. In comparison, workers who remained in their current roles increased their wages by just a fraction less: 4.6%.

The wage growth gap between job hoppers and job stayers has shrunk dramatically in the past few years. In 2023, job switchers were hauling in average salary bumps of 7.7%, compared with a 5.5% rate for people who stayed in their jobs. What has changed?  

After the onset of the pandemic in 2020, the years 2021-2023 saw an unprecedented boom in job openings and a corresponding expanded rate of new hires. Companies were desperately trying to attract talent during this period, which put job seekers in an excellent bargaining position for starting salaries. Fast forward to 2025, and the rate of U.S. job openings has fallen significantly, though it still remains high by historical standards. At the same time, the rate of hires has also declined and is now actually below the historical average.    

“In short, overall labor demand has cooled, and employers aren’t hiring nearly as aggressively,” said Justin Ladner, senior labor economist at SHRM. “Thus, the wage growth advantage that job switchers enjoyed during those post-COVID years has shrunk, as switchers have fewer opportunities to generate wage gains due to a decrease in job openings. And they have less salary bargaining power if they do obtain a new job offer.”

The power of job switchers to collect sizable pay bumps has fluctuated over the past few decades. According to the Atlanta Fed’s data, the wage growth rate for job switchers has significantly exceeded the wage growth of job stayers at specific periods, including during the dot-com boom of the late 1990s, the hot labor market right before the 2007-2009 Great Recession, and the few years of a strong labor market right before the pandemic hit in 2020.

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