Farrell: With so many people quitting jobs, it’s a great time to get a salary bump

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The numbers behind the “Big Quit,” the “Great Resignation” or maybe the “Great Discontent” — pick your favorite euphemism — are striking. Since April nearly 20 million employees have voluntarily left their job.

If surveys are to be believed, about 40% of employees say they might quit over the next six months.

What’s going on? Anthony Klotz, an economist at Texas A&M who studies the quit rate, captured the dynamics behind the exodus in a recent commentary.

“The pandemic has made many realize their job does not contribute enough [or at all] to their pursuit for happiness and meaning, and they have decided to invest their energy elsewhere — in new jobs, new careers or in other aspects of their lives [family, travel, creative endeavors],” he wrote.

The timing for making a job or career shift is ripe considering how strong employer demand is for workers. Employees are seeing slightly higher wages. According to the Conference Board, the median U.S. salary increase budgets for 2022 should be 3%. But job changers are pocketing double that wage increase in their new position, calculates the payroll-data firm ADP.

A wage increase is always an opportune moment to take steps toward improving household finances for the long haul. And that is particularly true at this moment in the economy for job-switchers. A fatter paycheck allows for increasing contributions into retirement savings without any impact on current living standards.

Some of the money from the higher wage could go into boosting emergency household savings. The message of the past dozen years or so — really, a timeless message — is that upheaval is normal, not the exception. It’s better to prepare for unexpected turmoil than to be surprised by an unforeseen turn of events.

Of course, this means you need a plan. The correct standard personal advice is to establish a budget before leaving your current job. It’s equally important to rejigger your household budget to take into account any pay raise.

What are your main financial goals?

Is it to get rid of credit-card debt, pay down the mortgage faster, set money aside for college or create a larger safety nest? Tap into the ability to automate your financial changes as much as practical so that your goals become habits.

A pay increase isn’t enough to dramatically change your financial life or everyday lifestyle, but with some planning the extra money should help put you on the path toward achieving your financial goals.

Chris Farrell is senior economics contributor for “Marketplace” and economics commentator for Minnesota Public Radio.


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