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Employees who stay in companies longer than two years get paid 50% less (2014)

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Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#131

Post by neogodless »

francisofascii wrote: post #57
ApolloFortyNine wrote: post #14

Odd to see skepticism here, I thought this was well known. I've seen it first hand just a couple years ago where a large company was offering new hires a 20% bump, and yet when I told them I was leaving the counter offer was only a 3~% bump.

I think people are skeptical of the 50% figure. New employees joining a firm might make more than the current employees at the same level, but do they make 50% more?

Probably depends on a lot of factors, but here's a simple example.

My first job I was an entry level developer. If I had stayed there for 25 years earning 3% raises each year... my salary would have finally doubled last year. In real life, I left there after ~2.5 years, and left the next job after 2.5 years, at which point my salary had already doubled.

Of course staying in the same company, I'd likely have moved up some and gotten some promotions with meaningful raises along the way. That company was pretty small but... I know that a lot of colleagues at that time stuck around and are VPs of some sort now, as the company has shown consistent meaningful growth. Early on, though, there was little room for growth in the short term at such a small company.

My largest raise staying at a company was going from $9.05 / hour to $13.05 / hour. That's 44.2%. Ha! But realistically since being salaried, my single largest raise was a couple years ago during the inflation rush, where I got 13%. Often changing jobs would land me 15-20%, and I could generally do that every 3 years without any obvious negative consequences. Assuming a more conservative 12% at 3 years intervals (with 3% in the years between), after 24 years I'd be at around 4x my original salary after 25 years.

Comparing 4x to the 2x from my first example, I've come out double. Factor in possible promotions and maybe it would've been 2.5x vs 4x which is about 50% more. If the promotions came with substantial pay raises, it would start to favor staying put. Personally I haven't seen any promotions like that because I've always been valuable as an individual contributor, and less so as management. But individual results may vary. We're looking at "on average" though.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#132

Post by sct202 »

Just want to point out that this is just an Excel thought experiment and not a study of peoples lives of any kind. The comparison is just 3% raise vs jumping every 2 years for 10%. I've seen too many people take this as some gospel of a career strategy when it's more of something to keep in mind when you get stagnant at a job.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#133

Post by assimpleaspossi »

ukoki wrote: post #54

Employers don't reward long-term employees because they don't need to. Even though everyone knows you make more by job-hopping, companies are following a rational strategy because too few people "walk the walk" despite wanting more salary. Arguably unethical, but rational. At the cost of losing a minority of job-hoppers they retain the cheap majority that: - finds job interviews exhausting, or is anxious about being…

I'm pretty convinced that, eventually for most of us, job hopping breaks down when you reach an age where you no longer fit in or lack of new skillset and you can't find a job. Then you wind up as one who stays at one place for more than two years for security--if you can find one.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#134

Post by softwaredoug »

Do yourself a favor and try to spend some time as a freelancer. Constantly have to sell yourself. Constantly managing stakeholders, etc.

This will translate to always thinking about your place in the market and gives you a lot of skills to avoid being taken advantage of.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#135

Post by aleph_minus_one »

arpyzo wrote: post #105
ukoki wrote: post #54

Employers don't reward long-term employees because they don't need to. Even though everyone knows you make more by job-hopping, companies are following a rational strategy because too few people "walk the walk" despite wanting more salary. Arguably unethical, but rational. At the cost of losing a minority of job-hoppers they retain the cheap majority that: - finds job interviews exhausting, or is anxious about being…

My observations suggest that this applies far more to lower performing employees than higher performing ones since the barrier to change jobs is lower for top tier talent. In effect this means that while companies that give paltry pay bumps that don't keep up with the market may successfully hold on to lower performing employees, they'll be continually churning through top performers.

> My observations suggest that this applies far more to lower performing employees than higher performing ones since the barrier to change jobs is lower for top tier talent.

I think talent and the capability to market/self-promote oneself (I believe only for the latter capability, the barrier to change jobs is much lower) are mostly uncorrelated.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#136

Post by citizen_friend »

nonethewiser wrote: post #63
ukoki wrote: post #54

Employers don't reward long-term employees because they don't need to. Even though everyone knows you make more by job-hopping, companies are following a rational strategy because too few people "walk the walk" despite wanting more salary. Arguably unethical, but rational. At the cost of losing a minority of job-hoppers they retain the cheap majority that: - finds job interviews exhausting, or is anxious about being…

Remote vs. non-remote seems like a huge factor here. Sure, many people when they're young are geographically flexible. But that's less true as you age and are tied down by a house, spouse's job, kid's school, daycare, etc. If you have to come into work, then all those details depend on your job location. You can't just change job locations. Again, this works for some single young people who rent apartments in NYC or…

Note that these are all lifestyle choices which agree with OP. If you really care about money you will be open to moving. If you value the location stability more then you won’t

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#137

Post by sangnoir »

laweijfmvo wrote: post #80

I've experienced this to varying degrees over my 15 year career, but can safely say that my current job at a FAANG probably pays more than any job I could get today (including another FAANG). Stock appreciation and more importantly, extra stock awards, are difficult to match. Or I could be a sucker and 100% wrong.

Setting aside stock appreciation, are your refreshers greater than new hire FAANG RSUs for a similar position?

Most FAANG total compensation dips in year 5 due to 4-year vesting schedules, and refreshers for existing employees being lower than nee hire grants (assuming stock price remains flat).

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#138

Post by BhavdeepSethi »

rgrmrts wrote: post #37
BhavdeepSethi wrote: post #15

Tell this to NVDA employees.

Nvidia is obviously an exception. That’s like saying working at startups will lead to higher monetary rewards because “look at early Facebook employees”, whereas your expected pay after 4 years at a startup is almost always lower than if you just worked at a medium to large company that’s public. (See https://levels.fyi )

Yes, it was meant to be a joke.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#139

Post by gamepsys »

tombert wrote: post #81

I'm not sure that this is sustainable anymore. I've definitely done the job hopping game, and it generally led to a substantial increase in salary each time, but eventually that comes back to bite you. I got laid off three times last year, and that already looks pretty bad on a resume, but then seeing a bunch of jobs beforehand where I was only there for two years makes a lot of employers really hesitant to move forw…

Did you leave positive impressions on your coworkers? Did you maintain contact? Part of the advantage of moving every few years is that you work with more people, which means more people are willing to recommend you for open positions. In those three jobs you were laid off from did any of your coworkers also get laid off? Where did they go to, and can they give you a recommendation?

No matter what story your resume tells, social connections will usually be a louder signal.

Re: Employees who stay in companies longer than two years get paid 50% less (2014)

#140

Post by datavirtue »

jholdn wrote: post #110

One hypothesis I don't see mentioned is that time limited roles pay more. For example, a person brought into to oversee an acquisition or transition is going to be paid phenomenally well (and, I think, rightly so). But part of that job is making your own position redundant. If you're still there after a few years, you aren't doing your job. I expect there are many other examples, roles that are project based and beco…

Depends on the business. If all revenue is coming from contract work then everyone's job is tied to having a contract. If revenue is streaming in from services then most jobs are tied to support and are buffered by much higher margins.
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