Powell tells students to be optimistic about the U.S. job market and AI
U.S. Federal Reserve Chairman Jerome Powell told Harvard Economics students on Monday (March 30) that he is optimistic about the medium- to long-term employment prospects for U.S. college graduates, despite the current period of very low job creation because the U.S. economy is the most dynamic and productive in the world.
If you haven’t seen a lot of pay increases lately and are wondering if it’s worth changing jobs for the chance to earn better wages, Bank of America says you should try if you’re young.
Millennials who changed companies saw their after-tax wages grow twice as fast as those who stayed put, according to bank data. Gen Z did even better, with revenue growth quadrupling.
Although the pay increases that job-changers are likely to receive are significantly lower than they would have been during the “Great Retirement” in 2022 after the COVID-19 pandemic, Bank of America said in a research note that this is still a sign that “the labor market may be gradually improving.”
“If the labor market continues to recover, the wage premium associated with changing jobs could rise to some extent, especially given that the premium is currently lower than before the pandemic,” the bank said.
How much more can people expect to earn by changing jobs?
Overall, after-tax and benefits wages for job changers increased by 8%, outpacing the 5% year-over-year increase for those who stayed in the first three months of this year, according to Bank of America. However, the difference between the two is the smallest in seven years.
By contrast, when Americans were slow to return to work after the pandemic, creating a labor shortage in 2022, workers were attracted to retirements by nearly 18% year-over-year wage increases, compared with a 7% increase for non-changers, the bank said.
Do some people get paid more than others when they change jobs?
According to Bank of America, Gen Z earns the most raises from changing jobs, so it’s no wonder they’re the most likely to change jobs. One in four people changed companies in the first three months of this year. This is more than 10 percentage points higher than millennials and more than three times as high as baby boomers, but significantly lower than in 2022, the data showed.
Older Americans, Generation X and Baby Boomers, are better off staying in their jobs, the bank said. According to the study, their wages were flat or declining year-on-year, while the group of workers who kept their jobs saw steady wage increases.
“Some people in this age group may be earning as much or less than those who choose to work fewer hours, perhaps because they are nearing retirement,” Bank of America said. “Some people may have been laid off or laid off and had their pay reduced.”
According to the bank, it was not profitable for high-income earners to change jobs. In fact, “for this group, it appears that loyalty is rewarded.”
In the first three months of this year, people in the top 5% of earners were the only group with a larger wage increase for those who left their jobs than for those who left their jobs, according to Bank of America.
“In fact, over the past four years, the wage premium associated with changing jobs has fallen the most among high-income households, especially those in the top 5 percent,” the report said. The decline could be due to an overall slowdown in high-wage industries such as finance, information technology and professional business services, the report said.
“For example, those who lost their jobs may have to settle for lower pay in a tight job market, while those who remained are now experiencing significant raises. It is also possible that in a ‘low hire, low layoff’ environment, companies feel there is less reason to pay a premium to job movers,” Bank of America said.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
