High inflation is making it harder and harder for Americans to get by on their salaries. The year-over-year inflation rate as of August was 8.3% — much higher than standard annual salary increases. To get a bigger salary boost, some Americans may be looking to switch jobs. But with a recession looming and layoffs rising, could this career move backfire?
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Switching Jobs Is Often the Best Way To Get a Significant Salary Bump
“Unfortunately, it is true that the most common way to get a substantial pay raise may be to switch jobs,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “Where it used to be looked down upon to be a ‘job jumper,’ now, in areas such as tech, it is common to see people change jobs every two to three years.”
The average salary increase when changing jobs is 14.8%, while the average salary increase is 5.8% when staying put, according to research by career resource site Zippia. That means that on average, switching jobs comes with enough of a salary increase to account for inflation while staying at your current job likely won’t.
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But Switching Jobs Right Now Does Come With Risk
While you may get a salary increase, you also need to take job security into account when switching companies.
“It may not be a good time to switch jobs,” Zigmont said. “All too often, companies will lay off staff on a last in, first out basis. We are even starting to hear about companies rescinding offer letters prior to start, and sometimes leaving people in a rough position.”
This has been especially true in the tech sector — Coinbase, Microsoft, Netflix, Twitter and Shopify have all conducted layoffs this year, with Coinbase and Twitter both rescinding job offers, Nasdaq reported.
However, if your current company is struggling, switching jobs can help you earn more and increase your job security.
“Changing jobs can give you a fresh start and help you to find a position that better suits your skills and interests,” said Meena Gupta, chief operating officer at NearbyMovers. “It can also lead to increased job security, as you may be less likely to be laid off if you’re working for a company that is doing well.”
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Instead of switching jobs right now, it might be best to use this rocky time to gain new skills that will make you a more valuable employee in the future.
“Build your skills so that when the overall economy is strong, you can make a big leap to the next level,” Zigmont said.
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