With inflation at a 40-year high, some pay raises don’t feel like raises at all.
The job market has seen significant wage growth since the beginning of the pandemic, and a new Joblist survey that polled over 1,300 job seekers found that 41% of them already received a raise this year. But only 28% of these raises were high enough to outpace inflation.
Inflation rose by 1.3% from May to June to 9.1%, with gasoline, food, and shelter as key drivers behind the uptick. That’s almost twice as high as the year-over-year average hourly earnings growth of 5.5% in April and 5.2% in May, as cited by the Joblist survey.
It’s all eating away at buyers’ purchasing power. But a consistently hot job market means that the best chance for workers to get more money is to find a new job, Daniel Zhao, senior economist at employee review site Glassdoor, told Fortune.
“Having outside options in hand can also help employees negotiate with their current employers by giving them better information about their market pay and more leverage,” he says. “Employers would be wise to listen to their employees and meet their salary needs in order to retain talent.”
Many Joblist respondents agree. Over three-quarters of workers believe they can regain their purchasing power by switching jobs to earn more money. This may help explain why the majority of workers who quit their job during the Great Resignation cited low pay as the chief reason for leaving.
Nearly one in four job seekers in the Joblist report believe they could increase their salary base by 1% to 5% just by job switching. One-third expect an even higher salary increase of 6% to 10%, which would bring them closer to just breaking even with the inflation rate.
Hospitality and retail workers were the most likely to say they could earn more than a 10% raise in another job. But warehouse, factory, and construction workers were most likely to say they could make more than 20% by switching jobs. Other fields, like education and health care, felt that even a job change wouldn’t increase their earnings.
With inflation continuing to climb, it looks the Great Resignation won’t be ending any time soon.