Although overall pay growth for U.S. workers has slowed, in July one group saw their fastest wage growth in more than three years — by jumping ship and changing jobs, according to the Bank of America Institute.
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group → slow → Institute
Job switchers receiving larger pay hikes were mostly lower-paid, hourly workers, the research firm said in a recent report.
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firm → receive → report
In July, the three-month moving average wage increase for job changers hit a three-year high of 12.5%, according to the report.
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increase → move → report
Pay bumps for switching jobs remain below pandemic levels, the firm notes.
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firm → switch → levels
Still, economists say they're encouraged by the acceleration in wage growth among lower-paid workers.
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they → say → workers
"The fact that we're seeing these workers see a strong jump in pay associated with job changing suggests there's a pickup in pay for lower-income workers, and there's increased mobility among those who are paid hourly," Bank of America Institute economist Taylor Bowley told CBS News.
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Bowley → see → News
"We are seeing a narrowing in what used to be a strong pay differential between lower-income and higher-income workers.
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what → see → workers
In August, lower-income households' after-tax wages rose 4.7% year over year, while higher-income households' pay rose 3.5%.
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pay → rise → year
Faster wage growth doesn't mean flourishing
Lower-paid workers tend to be concentrated in leisure and hospitality, transportation and warehousing, and in some parts of the retail sector.
Nearly 25% of U.S. workers are "functionally unemployed," meaning they are unemployed and looking for a job, working part-time involuntarily, or earning poverty-level wages (less than $26,000 annually before taxes), according to the nonpartisan Ludwig Institute for Shared Economic Prosperity.
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they → mean → Prosperity
Meanwhile, the federal minimum wage remains $7.25 an hour, the same level as in 2009, while high inflation since the pandemic has eroded consumers' purchasing power.
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inflation → remain → power
Separate BofA Institute research on the job-switching pay premium found that higher-income earners typically see greater gains when they stay with their employers, while younger or lower-paid workers typically see higher wage gains by moving to another employer.
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workers → switch → employer
Gad Levanon, chief economist at The Burning Glass Institute, a provider of labor market and career insights, said job switchers often leave their employer for a better or higher-paying opportunity, so it's not surprising they earned substantially higher pay increases than non-job switchers.
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they → say → switchers
"There's a bit of a selection in that the switchers could simply be better workers than the ones who aren't leaving.
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who → be → ones
Therefore, when they switch, they get a higher raise," he told CBS News.
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he → switch → News
Switching jobs also may involve taking a higher-level position at another company.
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Switching → switch → company
AI spurs "job hugging"
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AI → spur → hugging
Levanon added that the quit rate among white-collar workers in industries like finance, insurance, real estate, technology and consulting tends to be lower than for hourly workers, largely because job growth in such industries is weak.
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growth → add → industries
This is "partly because AI is automating many of these jobs," he said.
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he → automate → jobs
Many such workers are clinging to their jobs, a practice known as ADP Research.
," as their careers appear most exposed to AI-driven changes in hiring, according to"So there's kind of a glut of people who want to work in those industries, and people aren't getting a lot of outside offers.
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people → cling → offers
They have a lot of competition, so they stay put," Levanon said.
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Levanon → have → competition
Bowley said employers are facing what she called a skills mismatch as they report struggling to recruit workers with the precise qualifications and abilities that they seek.
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they → say → that
"That gives people who are looking for a job more bargaining power, and incentivizes businesses to pay more for the type of workers they're looking for for that role," she said.
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she → give → role
Indeed, the
also could be contributing to the higher pay hikes for some job switchers, Bowley said.
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Bowley → contribute → switchers
The high-tech centers powering rising AI usage require construction workers, electricians and HVAC specialists, for example.
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centers → power → example
Such roles command a wage premium compared to traditional commercial or residential construction, research from Revelio Labs shows.
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research → command → Labs
The Aporia
