What if your salary is too high for today's job market?
It's not that they are failing to live up to the deals they signed. It's that wages have fallen in tech and other industries while the expansion of pay transparency laws makes it hard to ignore this truth.
Go ahead and snicker at these lucky stiffs, but consider that you might be one of them. Two-thirds of U.S. workers say they are compensated at or above the current value of their skills, according to a new workforce report by consulting firm Korn Ferry.
'We've certainly seen a shift in the last year with our clients," says Ron Seifert, a senior client partner at Korn Ferry. 'They're not as aggressive in recruiting. They monitor offers a lot more carefully."
I spoke recently with more than two dozen people who job hopped during the pandemic-era talent war. For a lot of them, a sense of dread taints the satisfaction of having gotten raises while the gettin' was good. They fear they wouldn't be able to match their pay packages if they were looking for work today.
The thought of a pay cut is especially unnerving for those who bought homes and built comfortable lifestyles around their high earnings. Some worry their salaries could put bull's-eyes on their backs if their employers decide to cut costs.
A virtual-reality specialist who tripled his total compensation upon joining Meta a few years ago says he suspects his salary is one reason why he was laid off. A sales manager who had a generous incentive plan says her boss implied she had become overpaid before laying her off.
'I've been on the inside with companies as they make layoff decisions a thousand times," says Andy Challenger, senior vice president of Challenger, Gray & Christmas, which advises businesses on job cuts. 'Inflated compensation packages relative to the market can, of course, be part of those decisions."
Jacob Timm, a software engineer in Minnesota, used to think a better offer was always around the corner. Recruiters contacted him on LinkedIn almost daily in 2021 and 2022. In one six-month burst, he received an internal promotion then was poached by another company, moves that collectively boosted his earnings by 70%.
Now headhunters reach out to him every month or two. He's not looking for a new job but often browses open roles to gauge how his pay stacks up against advertised salaries. It's on the high side, especially for fully remote positions like his.
'If I got laid off, I think it'd be hard to match my current salary," says Timm, 30. 'I think I'd have to look a little bit longer and be willing to take a pay cut if I went six months without a job."
Seeing how the labor market has shifted, he and his wife padded their emergency fund. They now keep nine months of expenses in reserve, instead of three to six months.
Several others whose pay spiked told me they are confident they could equal their salaries on the open market. They don't worry about being replaced by cheaper talent, figuring the cost of recruiting and training someone else would negate their employer's savings.
Still, more job switchers are settling for lateral moves or pay cuts now than a few months ago. Just six in 10 people who recently changed jobs received pay increases, according to ZipRecruiter's latest quarterly survey of new hires. That's down from 73% in the fourth quarter of last year and a far cry from early 2022, when nearly half of job switchers pocketed raises of at least 11%.
Page Sheldon, an accountant in Colorado, changed jobs twice in a year around that time and increased his salary by 47%.
'Definitely wouldn't be able to replicate that right now, that's for sure," he says.
Sheldon, 30, benefited from a surge in demand for CPAs as the economy revved back up and corporate dealmaking boomed. Now, tariffs and general economic uncertainty are cooling merger activity. He says he would expect stagnant pay—and less work-from-home flexibility—if he switched jobs.
Joseph Magnuson, who works in private equity in Texas, scored a roughly 60% raise when he jumped to a different firm in 2021. He says he's glad he didn't follow some of his peers who chased even bigger gains.
That's only partly because he is married with three children and values work-life balance.
'It's all kind of coming to a head, and the people who were really opportunistic are starting to lose their jobs," says Magnuson, 32. 'Transaction volumes are down, projected returns are falling, and fair-market wages are declining a little bit."
People's level of panic depends on how they viewed massive raises in the first place. Some say they knew all along that their offers were inflated by a once-in-a-generation hiring frenzy. Figuring a correction was coming, they've been conservative with their personal finances.
Others confess to thinking their paychecks were on a rocket ship bound for ever-greater heights. If that's you, it could be wise to prepare for a time when the projectile falls back to Earth.
Write to Callum Borchers at callum.borchers@wsj.com
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