Pay premium for job hopping narrows to record low

Job hoppers saw fat pay increases for a while, but not so much anymore.

• The pay premium for switching jobs these days is at its narrowest since ADP began tracking in 2020.

Why it matters: In this low-hire, low-fire job market, employers don't have to work as hard to hire people. There's no need to lure workers with high wages if there's a surplus of folks hungry for new roles.

By the numbers: Median pay increased 4.5% from last year for those sticking with their employer, per an ADP analysis of private employers.

• For job hoppers, the pay bump up was 6.4%.
• The benefit for switching jobs appears to have peaked in April 2022, when switchers saw median raises of 16% during the so-called Great Resignation. (Good times!)

Zoom in: The pay premium varies by industry. Workers in construction, mining and finance had wider premiums, per ADP data.

The intrigue: The ADP data only looks at the private sector, and might be overstating the pay premium for job switching.

• The premium has virtually vanished, per a separate measure from the Atlanta Fed, which tracks the three-month moving average of hourly median wage growth.
• The raise for job stayers was 3.5% compared with 4% for switchers, per that wage growth tracker.