Job-Hopping is Paying Off

Just when we thought we were beginning to understand Gen Z, a new study tells us that we don’t know them at all. We’ve read time and time again that Gen Z wants meaningful work and is willing to pass up more lucrative positions to achieve it.

Although this is obviously true for some, the new report by H&R Block reveals that nearly one-third of Gen Z workers changed jobs last year. Thirty-five percent of them did it for the money. In fact, out of all the generations studied, 30% of Gen Z workers made 30% more in 2023 than in 2022. And the trend is expected to continue, with two-thirds of Gen Z workers expecting to earn more in 2024.

Additionally, Gen Z is seeking financial security outside of their full-time jobs, with many of them using side hustles to supplement their income. Unlike previous generations, they are showing that they are more financially savvy than older Americans and willing to take risks with investments in crypto and gold.

While most Gen-Zers gravitate toward larger companies, 29% want to be their own boss, 59% want to open a small business, 22% want to become an influencer, and 14% want to work as an artist.

In a recent Inc. article, Latasha Randle, Strategy and Small-Business Program Manager at H&R Block, said, “’Young workers’ see traditional employment as limiting, so they seek work that aligns with their values, interests, and social desires,” adding that this “often leads them to pursue side hustles and passion projects.”

Job-Hopping Isn’t Paying Off

Although the H&R Block study seems to show that job-hopping is the path to financial gain, Jack Kelly, Senior Contributor for Forbes, says, “Not so fast.”

He acknowledges that, historically, switching jobs has been a reliable strategy for those seeking higher wages, but current data indicates that this tried-and-true tactic is losing steam in today’s job market.

According to recent data from ADP Pay Insights, “…the financial gains of this practice are diminishing, as the difference in pay increases between job switchers and those who remain in their positions has decreased considerably.”

The Forbes article elaborates, “Job changers experienced a significant decline in pay bumps, with the median year-over-year wage growth dropping to 6.2% in October, marking the lowest level since ADP began tracking the data in 2019 and a substantial decrease from the pandemic-era peak of 16.4%.

During the labor market recovery in 2022, the wage growth gap between job switchers and job stayers reached a maximum of 9% but has now narrowed to just 1.5%.”

According to Bloomberg, data indicates a slowing in the job market. As they report, “Job openings have been on a downward trend for most of the past two years, and this report showed vacancies declined broadly across industries. The number of layoffs rose to the highest since January 2023, while fewer workers voluntarily quit their jobs — a sign of less confidence in their ability to find a new one.”

In the same article, Bloomberg reports that the slowing job market data… “runs counter to the September employment report and other indicators that pointed to a still-strong labor market and economy… A separate report… showed US consumer confidence increased in October to the highest level since the start of the year.”

Stuart Paul of Bloomberg Economics concludes, “The decline in job openings stands in stark contrast to most of September’s labor-market data. We think declining demand for workers will become increasingly evident across labor indicators in months ahead.”

So, What Should We Believe?

It appears evident that job-hopping has been rewarding, especially for Gen Z. However, other data indicates that the significant financial gains realized during this short window will not continue, even if Gen Zers believe it will.

If this is true, we can expect Gen Zers to continue pursuing side gigs, financial investments, and other means to supplement their incomes.

How Will This Affect Their Job Performance?

Every company seeks to have loyal, dedicated workers. Today, more than ever, new workers are splitting their focus on more than one job. Managers should be aware of this trend. Management cannot tell employers not to work other jobs on their own time, but they should ensure that the time spent on different jobs does not bleed over.

How Can ASN Help?

Today’s job market is complex and in a constant state of flux. Keeping track of these changes and trends and realizing how they may affect our clients is an integral part of our service. If you have any questions as to how these market changes may impact your organization, we would love to talk with you. Just give us a call.