Why Pay Raises Right Now Aren’t Helping People Financially
Individuals across the nation are hopping jobs for pay raises at record high rates, however, those raises aren't helping as much as they should due to a sustaining period of intense inflation.
People are leaving their jobs at record pace with 38% of Americans quitting in the last few years, according to a new Marist poll. Of the employees going in search of pay raises, more belonged than half to the Millennial and Gen Z demographic. At the end of 2021, the job leaving rate hit the highest level ever recorded dating back to 2000.
And that rate has remained at a historic high this year. But in some instances, these pay raises aren’t really helping folks financially. During the pandemic, Debby Perta, who never saw herself as a job jumper, decided a career change was the right move.
After 10 years, she’d gone as far as she could at her company and thought her teenage son would enjoy being closer to family in Arizona. The 38-year-old had also been hearing about the area’s hot job market, teeming with new opportunities and pay raises. She quickly landed a job managing a bank branch in Phoenix and moved west.
Although quitting a steady income was out of Perta’s comfort zone, it seems to be what people are doing for pay raises these days. While leaving a job for no apparent reason didn’t look good on a resume a decade ago, in 2022 economists refer to the trend as Dynamism. Ever since the Great Recession and 2008’s mass layoffs, workers grew security-oriented, hanging onto jobs and staying put, President of the Economic Policy Institute, Heidi Shierholz told NPR.
“But now we are so freaking dynamic,” she explained. “And that is a good thing.” The logic behind the trend says if people are switching jobs, then they’re probably taking a new one that’s a better match for them.
That means the economy runs better and people get a much-needed pay raise. But there is a dark side to dynamism. The constant hiring and training while picking up the slack for unfilled roles can be exhausting for employers and staffers.
For Perta, the staff shortage at her new job meant that she spent most days filling in as a bank teller while her Master’s degree, years of experience, and manager title went to waste. Money also became a problem as the pay raise didn’t cover her monthly expenses. To help make ends meet in the more expensive city, the former Illinois resident picked up shifts as a Doordash delivery person on weekends.
As a result, she started looking for another new job, just six months in. Fortunately, Perta got one at a large financial institution pretty quickly. And it came with a pay raise.
The mother-of-one is now much happier in her new role where she feels fulfilled. While most employers are increasing salaries and adding perks to offset inflation concerns, a lot of those gains aren’t enough to keep pace with rising living costs. According to Madelyn Machado, a Reverse Recruiter in Tampa, Florida, the best way employees can help their situation is to ask for more money.
In an interview with CNBC, Machado explained the best approach people can take with their boss. “Focus on how you helped the company save or make money”, she said. And tie in that inflation and a tight job market make this a good time for a pay raise adjustment. Even if you get a no, Machado says it’s still worth communicating that you’re worried about inflation.
