2008 March 23 Sunday
Frequent Job Switching Can Lower Salaries

Don't switch jobs too often.

Workers who frequently change employers risk negative consequences to their paychecks, according to new research published in the February issue of the American Sociological Review, the flagship journal of the American Sociological Association.

Note that while the lady conducting this research is at a Canadian university the dataset she is using was collected on Americans. So these results are relevant to people in the American labor market.

To determine the impact of career mobility on worker’s wages, sociologist Sylvia Fuller of the University of British Columbia examined data from the 1979 National Longitudinal Survey of Youth, tracking nearly 6,000 workers during their first 12 years in the labor market.

Despite the frequent job moves made by young Americans today, Fuller’s research suggests that workers who frequently change jobs generally end up earning less than their more stable counterparts.

“The past 30 years have seen the erosion of long-term employment, and young people are increasingly told to expect ongoing employer changes throughout their careers,” said Fuller. “However, this research examines the cumulative changes workers make, or are forced to make, and demonstrates that these career moves may not always result in higher earnings.”

Hopping around helps more in the early stages of a career.

By and large any benefits of job mobility accrue mainly in a worker’s early career. Fuller finds that both men and women typically experience substantial mobility during their early careers, although women change employers slightly less frequently than men.

Fuller’s research indicates that mobility can be a wage asset when it is concentrated in the early years of employment and not coupled with layoffs, discharges, employment gaps or family-related leave. In this case, moderate or even high levels of mobility can lead to equal or better wage outcomes than stability.

Stay in a job at least 5 years if you can.

Aside from this exception, Fuller finds that wage outcomes deteriorate as mobility rises.

One reason for lower wage trajectories among high-mobility workers is their failure to accumulate valuable early tenure associated with staying up to five years with an employer. In the first five years of a job, each year of tenure is associated with approximately 2.4 percent higher wages for men and 2.9 percent higher wages for women. However, after five years with an employer, women’s gains from tenure plateau and men’s begin to erode.

Think about this intuitively. If you stay in a job longer you can get to know more people and how to work across teams and layers of a particular company. Suppose you are a high performer. Your odds of impressing someone who can eventually reward you goes up with time. You can have a bad manager but eventually get transferred to a different manager who has noticed your performance or who knows someone else who has made notice of your capabilities.

Share |      By Randall Parker at 2008 March 23 07:39 PM  Economics Labor


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