job switching – Federal Reserve Chair Jerome Powell told Harvard students on March 30 that he remains optimistic about longer-term job prospects for U.S. college graduates, even as hiring is weak today. Meanwhile, Bank of America data suggests switching jobs can still boost e
Federal Reserve Chair Jerome Powell’s message to Harvard economic students sounded like a door left open, even as the road in front of them looks rough.
On Monday, March 30, Powell told students he is optimistic about the medium and longer-term job prospects for U.S. college graduates despite a current period of very low job creation. He framed the backdrop in stark terms: the U.S. economy is the most dynamic and productive in the world.
For graduates (and everyone else) weighing whether it’s finally time to move. the practical question is less about optimism and more about pay. A new readout from Bank of America. based on its research. lands in the middle of that debate: job switching can still pay off. but the size of the premium has changed.
Bank of America says young workers should consider jumping ship if better wages are the goal. Millennial workers who switched companies saw after-tax wages grow twice as fast as those who stayed put, according to bank data. Gen Z did even better, with the rate of earnings growth increasing fourfold.
The note comes with a key caveat. The pay increases job switchers may receive are significantly smaller than they were during the “Great Resignation” in 2022 after the COVID-19 pandemic. Still, Bank of America called the trend a sign that “the labor market may be gradually improving.”
“If the labor market continues to recover, we might see some increase in the pay premium for switching jobs, especially given the premium is currently lower than it was pre-pandemic,” the bank said.
The timing matters. In the first three months of this year, overall job switchers saw after-tax and benefit wages grow 8%, outpacing the 5% increase for workers who stayed in their jobs, Bank of America said. But the gap between switchers and stayers is the smallest in seven years.
That shrinking difference stands out more sharply when compared with 2022, when labor shortages helped drive bigger jumps. Bank of America said workers who left their companies during that period received nearly 18% pay jumps from the prior year, compared with a 7% increase for non-switchers.
Bank data also points to who benefits most from switching—and who doesn’t.
Gen Z is seeing the largest pay increases from job switching, and it also has the highest rate of switching. In the first three months of the year, one in four workers changed companies, Bank of America said. That pace is more than 10 percentage points higher than millennials and more than three times the rate of Baby Boomers. though it remains sharply lower than in 2022. the data showed.
By contrast, older workers appear more likely to do well by staying. For Gen X and Baby Boomers, Bank of America said pay changes from a year earlier were flat or declining for those who switched jobs. For workers in those groups who remained in their jobs, pay rose steadily.
The bank offered a blunt explanation for what might be happening among older cohorts: “Some people in this generation may be taking similar or lower earnings as some are choosing to work less hours. perhaps as they approach retirement.” It added that another possibility is that some workers “have taken lower pay after being laid off or fired.”.
Bank of America’s findings also challenge a simple version of the “loyalty vs. hopping” story.
Switching jobs, the bank said, didn’t pay for top earners. Instead. it argued that “for this group. it appears that loyalty pays.” In the first three months of the year. those in the top 5% by income were the only group where job stayers saw stronger wage growth than job switchers. The bank also said the pay premium for switching jobs has declined the most for higher-income households. especially those in the top 5% over the past four years.
Bank of America linked that decline to a broader slowdown in higher-paying industries like finance, information technology and professional business services. It also pointed to a tight hiring environment—where workers who lose jobs may have less leverage and those who remain may see larger raises.
“For example. those who lost their jobs may have to settle for less in a tighter job market. while those who remained are now seeing larger pay rises. It could also be that in a ‘low-hire. low-fire’ environment. companies feel they have less reason to pay a premium to job switchers. ” Bank of America said.
The sequence of these numbers tells a story in plain terms: in a market with weaker hiring momentum than during the pandemic-era churn, switching still brings a wage bump for many—especially younger workers—but the premium is smaller, and it appears to shrink fastest at the top.
Powell’s optimism is aimed at the longer arc. and Bank of America’s data is focused on what workers can realistically bank right now. Together. they leave a clearer picture of where the pressure is easing. where it hasn’t. and how the payoff for taking a risk at work is increasingly dependent on who you are. when you move. and what kind of job market you’re stepping into.
Jerome Powell Federal Reserve job market job switching wage growth Gen Z millennials Bank of America after-tax wages labor market recovery Great Resignation 2022 top 5% income workers