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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?

  • 11
    You are making a heck of a lot of assumptions that aren't backed by any tangible evidence. Do you really think you could get a job doing whatever you do for $1.03M/year based solely on the fact that you told them your current job pays $1M/year? Clearly there is a limit to this strategy based on how well you can sell yourself and what the market will bear. – JohnFx Mar 25 '11 at 0:47
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    The best long-term strategy to become rich is to spend substantially less than you earn, no matter what your income level. – KeithB Mar 25 '11 at 14:01
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    I was taught not to jump ship for less than a 15% increase. You only get those from companies who really want you and are willing to reward your hard work. – justkt Mar 27 '11 at 22:40
  • Are you talking about "3% after inflation", because if not then you are losing money. – DJClayworth Mar 28 '11 at 1:06
  • yes..after inflation – Victor123 Mar 28 '11 at 19:08
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"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.

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    I'm acting hiring manager for my team. The company's recruiting organization uses software to manage the hiring process. There's a cute little thumbs-down button for people whose resumes are rejected, and you can categorize the reason. One of the top reasons is "too many short tenures in employment history". – fennec Mar 26 '11 at 22:01
  • The hubris of companies in believing that people should just "stick it out" is galling. Its better to quit a bad situation than to continue to be taken advantage of. In corporate IT, recruiters and hiring managers will blatantly lie to you, like saying "there is no off hours support", but when you take the job you discover that you're doing support off hours all the time. Or that the job as described to you when you took it turns out completely different. Companies have no right to expect "long-tenured" work history when they act the way they do in their hiring processes. – NPFinance Mar 28 '11 at 17:50
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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..

  • Love the idea of a blog (a very long term blog). Makes me think of the wonderful 7Up series out of Britain. – gef05 Mar 25 '11 at 0:24
  • Out of curiosity, what industry are you hiring for? – Paul Aug 12 '11 at 11:38
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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.

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    Yeah, I don't think I'd work long term for a company that wasn't offering annual raises that at least matched inflation. – Eclipse Mar 25 '11 at 1:03
  • @Eclipse - you'd be surprised how many don't, though – warren Jun 14 '13 at 13:32
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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.

  • 'move up the job pyramid quickly'. In programming when you reach the 8 yr mark, the job pyramid is so overwhelming with options it can be difficult to pick and choose a fixed track. – Victor123 Mar 25 '11 at 20:44
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    The definition of success varies. I moved into management -- a choice that isn't for everyone. Others choose to be masters of their craft. If you pick technical mastery, you need to find an organization where they reward people who choose that path. I work at a government agency where that choice puts you on a career plateau in your early 30s. – duffbeer703 Mar 25 '11 at 23:30
  • How did that work for you? – Victor123 Mar 27 '11 at 20:58
  • It's ok. It is an adjustment moving from IT where problems and solutions are well defined to a world where your problems and solutions are often more ambiguous. – duffbeer703 Mar 29 '11 at 22:14
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"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.

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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.

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