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- The Dangers of Job Hopping in 2024
The Dangers of Job Hopping in 2024
Focus on this before you worry about a raise.
1,254 Words | 5 Min 13 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing why job hopping - which has been a huge income booster for millions of employees since the pandemic - is slowing to a crawl.
We'll also discuss what the implications are and how you should think about job security over the coming years.
Let’s dive in.
Last week I saw an article about how - despite their pay bumps - many workers who job hop report lower satisfaction levels than those who stay put.
If you’re unfamiliar with the concept, job hopping involves getting hired at a company with no intention of staying there long-term. Instead, hoppers continually pursue job offers at similar companies with the goal of securing a higher salary and/or more prestigous job title.
From 2021 (when pandemic restrictions started to loosen) through 2023, job hopping was a highly profitable strategy. With many workers securing $6,000+ annual salary increase every six months.
Over the last 12 months, there's been a massive slowdown, with stories and anecdotal evidence showing the practice is much more difficult now.
We believe there are multiple reasons for this, including:
So what does this slowing trend mean for workers?
To understand the future of job hopping, you have to look at things through a big picture lens to grasp why job hopping worked from 2021 to 2023 (and when it will be an effective strategy again).
First, understand that in a non-pandemic constrained, growing economy (which is the norm), it’s employers who wield the power. Mainly because they’re the ones who write the checks.
As an example, in a healthy economy where people are able to move cities with ease, companies can reject job candidates knowing someone else just as qualified will be ready to step up (at a lower salary).
During COVID, however, most people were required to work from home (because of either state mandates or the employer’s company policy).
This, in turn, put the power back in employees' hands. Mainly becaues the pool of people who were willing / able to move in the middle of the pandemic was a mere fraction of what it would be during normal times.
Second, during 2020 and 2021, assets were appreciating like crazy. Home prices, stocks and crypto in particular. And because of that, money was sloshing around like beer at a college kegger.
From companies splurging on unnecessary expenses, to crypto bros making millions, 2020 and 2021 were some of the most profitable years in history to be in business and/or an investor.
And with money coming from investments (including increasing home equity), the strongest white collar job market the US has ever seen, and companies stuck between a rock and a hard place thanks to the pandemic, workers weren’t scared of being fired.
Because even if someone did get laid off, finding another (and potentially higher paying) job was easier than ever.
In short, between:
COVID stimulus (which most people put into savings)
A strong economy
Rising asset prices
The Work From Home mandate
And an incredibly strong job market
...workers had the upper hand in job negotiations (for what was arguably the first time ever).
Fast forward to today and employers have regained the power position.
First, studies show the savings most people built up from all that free COVID money are long gone.
Second, while Bitcoin and the stock market are breaching record highs, many people exited the market as things started to crash in late 2021 / early 2022. And because so many people were predicting recession, many investors missed the upward move in both crypto and stocks.
More important, studies show most people gauge their wealth based on how much equity they have built up in their homes. And since late 2022, home prices have held steady (and in some markets, dropped by 10% or more).
In addition to company mandates requiring their workers to come back (with the option of getting fired if they don’t comply), a variety of surveys show people who insist on working from home are missing out on promotions and raises (which are now going to the people who returend to the office).
Last, while the government touts near record low unemployment, digging deeper into the data shows three things:
1 - Demand for blue collar / service jobs is sky high while white collar workers are being laid off
3 - New data shows illegal immigrants may be responsible for a huge portion of newly acquired jobs, making the job market seem stronger than it is
4 - Many of the so called “job postings” out there are fake (known as Ghost Jobs), leading applicants to believe there are more jobs than are actually available
From tech layoffs to fresh college graduates who can’t get hired, the last 18 months have been brutal for knowledge workers.
Combine the above points and it’s our opinion now is not the time to be job hopping.
In fact, with a record number white collar workers worried they might be laid off, the name of the game in 2024 is job security.
While we wouldn’t recommend disregarding upward career moves, understand the macro landscape is much different from how it was two short years ago.
Economic growth has slowed. People’s savings are gone. Desperate job applicants are lowing their standards. And between high interest rates, inflation, and slowing economic growth, both consumers and businesses are tightening their belts.
So when should you consider job hopping again?
First, if you have a killer offer on lock, take it. While the job market has slowed in general, there will always be exceptions. And if you can take advantage of one of those exceptions, you should consider it.
In general, however, most people will be better off waiting until corporate/while collar hiring picks back up. Which, for better or worse, may not happen until 2026 or 2027 (depending on a variety of economic factors we don’t have time to discuss here).
Either way, understand economics booms and pullbacks happen in cycles.
While money was flowing like wine in 2020 and 2021, those times are long gone. Today, however, both consumers and businesses are trying to survive a post-inflation world where liquidity is being drained the cost of borrowing is dramatically higher.
So, for the time being, your primary goal is to avoid being fired (which could result in you having to return to a brutally competitive job market).
Next, make sure you’re continually improving your resume.
From chasing more prestigious titles to learning entirely new skills, job hoppers who make the most over the coming 18+ months will be the ones who are ready to make the hop when hiring picks back up.
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💡 Takeaway: While job hopping was an effective strategy after the pandemic, with strong macro-economic background, times have changed. Today, most people should be focused on job security over maximizing their incomes.
🎁 Resources:
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