Brief
Pay boost for job‑hoppers falls to 8% as Gen Z faces tighter labor market
Bank of America Institute data shows the premium for switching jobs has halved, leaving Gen Z workers with the smallest earnings advantage in years.
By Felo News Desk · Published
Bank of America Institute analysis shows the after‑tax pay increase for workers who change jobs fell to 8% in the first quarter of 2026, down from an 18% jump in 2022, while the quit rate held at 1.9% in August, the lowest level since 2020.
What happened
In 2022, the typical employee who switched jobs saw an after‑tax salary rise of nearly 18% over a year, compared with a 7% raise for stayers, according to the Institute’s review of its customers’ deposit data. By Q1 2026, that premium narrowed to 8% for switchers versus a 5% gain for those who remained, marking the smallest gap between the two groups in seven years. The Bureau of Labor Statistics reported that only 1.9% of non‑farm workers quit their positions in August, keeping the quit rate near its lowest point since 2020.
What the reports add
The Institute notes that the shrinking premium reflects a “low‑hire, low‑fire” labor market where employers are reluctant to add headcount amid economic uncertainty. It also cites research from the National Bureau of Economic Research indicating that a varied résumé now matters more than ever for reaching top‑level positions, with newly appointed CEOs averaging about 10 more years of experience outside their eventual firms than their 2000 counterparts.
What was said
Bank of America Institute economists wrote that companies may feel less pressure to pay a premium to attract new hires, while workers, fearing they cannot switch, are “job‑hugging” – staying in roles they would previously have left and growing resentful of their employers.
How it came about
The decline follows the end of the Great Resignation, when millions quit in 2021‑2022 seeking higher pay. A September update from the Institute indicated that job‑switching premiums have risen to their highest level in more than three years, with Gen Z still seeing the biggest gains, but the premiums remain below pre‑pandemic levels. Meanwhile, Revelio Labs data shows the average age of a new hire rose to 42 in 2025, up from 40.5 in 2022, highlighting that younger workers are less likely to be recruited.
Key facts
- Job‑hoppers' after‑tax pay premium fell to 8% in Q1 2026, down from 18% in 2022. (fortune.com)
- The quit rate for non‑farm employees was 1.9% in August, the lowest since 2020. (fortune.com)
- Average age of new hires rose to 42 in 2025, up from 40.5 in 2022. (fortune.com)
What we don't know yet
- The article cuts off before providing the unemployment rate for recent college graduates.
Sources
- [1] fortune.com — originally reported as “Job-hopping got workers an 18% raise in 2022. Now it's 8%—and Gen Z is hurt the most”
