In general, the majority of our nation’s current workforce is underpaid. It’s no secret that many individuals are overqualified for their current positions, in which they are required to do the work of two people. While there are many reasons for this, including the economy, there is one big reason over which we actually have control and can do something to change; employment periods.
Staying employed at the same company for over two years will, on average, cause you to make 50%+ less over your lifetime.
That 50% figure is a conservative estimate and only considers 10 years of employment. The longer you work, the more you will lose out on, so that number will increase over the course of your most likely 40 years of employment.
The current average raise of an employee is somewhere around 3%, with 4.5% for extraordinary employees and 1.3% for those who underperform. The current inflation rate is about 2.1% (the annual increase in the cost of living). When this is taken into consideration, an average raise is really less than 1%! The average raise an employee starting at a new company will receive is somewhere between 10%-20% and sometimes even more depending on the position and industry.
Why is this?
Companies have become caught up in capping the salaries and raises of current employees due to fear of the seemingly never-ending recession. These same companies are obsessed with hiring the best new talent and tend to pay more attention to attracting great employees then keeping the ones they already have. Raises are usually calculated as a percentage of your current salary, so there is a maximum amount you can receive, which severely limits your monetary mobility.
Let’s say for instance, your current salary is $50,000. With an annual raise of about 3%, in three years you will be making about $55,000. That’s only $5,000 more over three years. Now, let’s say after two years with that company, at which point you would be making roughly $53,000, you leave and join a new company. If you receive a 10% pay increase, which is on the more conservative side of how much you can demand, you will already be making around $58,000. That is only at the end of your second year; by the end of your third you will be at $60,000. That is $5,000 more than you would make at your last job and that is only over the course of one year. Continue doing that over 20 years and just imagine how much more you can make.
All this to say, if you are comfortable at a certain salary and truly love your job, even more than your level of compensation, then by all means, stay at your job. This is moreso for individuals who hold compensation as one of their main employment incentives.
I personally have, over the past 2.5 years, increased my salary by around $25,000 by cashing in on opportunities I came across through networking. This was easy for me as my main goal is to be self-employed, so I see jobs as more of a means to an end and do not become too attached to any of them.
So do what is best for you, whether it be following your heart and your passion or following the money. Just remember these roads are not mutually exclusive and can both be followed with the right perspective!