Changing jobs as a strategy to build a good income?

Question

In most professions, it seems that when you change jobs, you are eligible for a pay hike (at least up to a certain ceiling amount). My questions are:

1. Is this a viable long term strategy to become rich? If not, why not? After all, if you change jobs every 2 yrs, and over a 20 yrs period, get an average 3 % hike for every change, if you start at age 23 with starting salary of $60K, by 50, you would have earned quite a good sum.

2. From an employer point of view, why does an employer agree to pay someone a raise simply because he is changing? Let us say for position X, there is an employee (#1) working in company A earning $80K. Employee #2 comes from company B and says: I already earn $80K in company B for position X. I am willing to switch but for $100K. Why would company A entertain a request like that? From employer A's POV, employee #1 and employee #2 both work for position X, but one would earn more.

EDIT:Chaging jobs every 2 years LOOKS bad I agree. But from HR POV, if every change is associated with moving up the ladder role wise, then I think it can be excused. No?

EDIT#2: Some of the responses points to the idea of switching at the right time to command a higher slary. What magazines/journals/websites does one follow that gives a best idea of salary trends? i.e. if this is a good time to switch?

Answer 1

"Is this a viable long term strategy to become rich?"

Unlikely.

"If not, why not?"

Reason 1. You will never successfully increase your pay by at least 3% every time, unless you fall into the tiny group of individuals that companies fight over. (BTW. People in that group don't tend to think in terms of percentages as mundane as 3%.)

Reason 2. If I get your resume and I see that in ten years you have jumped ship five times and are now looking for a sixth position - "Resume, meet Mr Dustbin."

"why does an employer agree to pay someone a raise simply because he is changing?"

Sometimes this will happen - but you are reading this in absolute terms. It's not a given - but very able applicants who bring something new with them - let's say your a federal contractor, and a proposal writer with excellent DoD contacts that you've been looking for comes along - then exceptions get made.

But they are that - exceptions based on specific circumstances. You can't assume it always works that way.

Answer 2

Interesting idea. This reminds me of the guy who started with a paper clip and traded up to a house (see here). I think the job switching idea would be an interesting project and could make for a good blog.

One downfall may be that employers start to become wary of hiring people who only work at companies for 2 years. These 2 year spans may look OK at the beginning of one's career but after 15 to 20 years I think it becomes worrisome to an employer. We are in the middle of interviewing candidates where I work and it looks bad for an applicant if they only work for 2-3 years in their past positions.

Employers agree to pay someone more than their current salary in order to entice them to come work for the employer. If the employer simply matches the employee's current salary then there has to be other reasons for the employee to leave - bad working conditions, bad projects, etc..

Answer 3

Seems a little overly complicated. Many jobs give annual raises around 3%, so your strategy would work just as well and maybe better if you stayed put at the same company.

Answer 4

It depends. If you're not an employer with a fixed pay scale, employees often get compensated less than new hires with the right skills who arrive in a good market.

Usually this is a good strategy to transition from an entry-level role to a mid-level role, but job hopping loses steam when you're moving from a mid-level role to another mid-level role. (Assuming that the job market isn't in a boom cycle.)

Basically the way to increase your income quickly is to have the right skill-sets and move up the job pyramid quickly. Generally, it makes sense to jump ship to move from a manager to an executive, or a individual contributor to a manager. But... it's usually harder for an outsider to move into desirable senior roles.

Answer 5

"why does an employer agree to pay someone a raise simply because he is changing?"

You are thinking about this the wrong way. People (usually) change jobs when they are offered a pay raise. So while you find that job change is associated with a pay raise, it's because people accepted the new jobs in which they got more money, and rejected those where they didn't.

So you don't get a pay raise because you change jobs - you change jobs because you get a pay raise. And if you are being paid a good rate for your work now, potential employers aren't going to offer you more.

With exceptions, of course.

Answer 6

Yes it is a good strategy as long as you can convince employers you are good. In the end you could prove to be overrated, which means that you are the first to go in bad times.