'Everybody's a free agent': how employees are using a controversial tactic to force their bosses to give them a raise




two hands coming in from the left and right pushing in a small stack of poker chips and a large stack of poker chips
two hands coming in from the left and right pushing in a small stack of poker chips and a large stack of poker chips  

How employees are using a controversial tactic to force their bosses to give them a raise

When Michelle Reisdorf started off in the recruiting business 26 years ago, it was pretty much a given that people who interviewed for a new job would take it, assuming they got the right offer. But these days, Reisdorf has found, that's no longer true. More and more, candidates are applying for jobs with no intention of jumping ship. They're just looking to land an offer that they can use to force their current employer to give them a raise.

"Candidates are shopping more now than they ever have," Reisdorf, a district director at the staffing firm Robert Half, tells me. "They're looking out for themselves, and because they have so many options, they really can explore and use what they know about other companies to get more in their current work situation."

Employers, not surprisingly, hate that people are using job offers as bargaining chips. If you weren't serious, hiring managers are complaining, you shouldn't have wasted our time. And the bosses scrambling to put together counteroffers are grumbling: Where's the loyalty?

But what does it say about the way companies dole out raises if employees are forced to land another job before their bosses will pay them what they're worth? That strategy may work for employers in a normal job market, when it's hard to find another job, let alone a better-paying one. But over the past year, in the midst of a nationwide hiring frenzy, employees began to realize that being loyal to their employers doesn't pay. As I reported in May, those who switched jobs during the Great Resignation are by one estimate making 7% more on average than those who stayed put. And in tech and finance, the pay gap is even higher.

So now employees are taking matters into their own hands - by applying for jobs they have no intention of taking. It's like threatening to leave a relationship to force your partner to appreciate what they've got. "You can't fault them," Reisdorf says. "Employees are finding that there's a big gap between where they are and what they can get."

The penalty for loyalty

It's not as if anyone wants to go through an unnecessary job search. From writing your cover letter through all the seemingly endless interviews and negotiations, looking for work requires a lot of time and effort. It's not a hassle you undertake lightly - unless it's your only option to get a meaningful raise.

Take my friend. Underpaid for years, she had been asking for a big raise to get her salary up to what she felt she deserved, to no avail. So recently she interviewed at a competitor, which offered her the pay bump she was looking for. Once she went to her bosses with the outside offer, they immediately gave her the raise she wanted. Since she generally likes her job, she agreed to stay. But the process still left her a little resentful. Why did she have to go through that ordeal just to be fairly compensated? Had her employer just given her what she deserved from the beginning, everyone would have been spared a lot of drama.

At the best companies, in fact, the gold standard is to give everyone what they deserve from the get-go. Smart employers regularly compare their own salaries against the market, proactively eliminating any gaps between what their employees earn and what they could command if they went elsewhere. Recently, as salaries have risen so quickly during the Great Resignation, some companies have even started reviewing salaries multiple times a year to keep up with the market.

"Companies that are doing a good job of retaining their staff are rewarding performance throughout the year," says Nick Louca, who heads the New York office at the recruiting company Robert Walters. "It shouldn't take you having to threaten to leave in order to get the money that you deserve."

The operative word there is shouldn't. For most employers, the standard HR playbook remains the same as it has for years: Hire employees at the going rate and then dole out relatively small annual raises, which have averaged about 3% over the past decade. As a result, the longer someone stays at a company, the more detached the person's compensation gets from what they could earn on the market. Loyalty to your employer is a sucker's game.

Companies always knew they were shortchanging the employees who stuck with them the longest - but the red-hot job market that emerged amid the coronavirus pandemic exposed the secret for all to see. Desperate to attract experienced workers, employers began offering salaries that would have been considered outrageous just a few years ago. And even as the hiring frenzy has slowed and layoffs have increased in recent months, the pay disparity between new hires and existing employees has remained steady, about 7%. "The job market is still performing very well," says Jay Denton, the chief analytics officer at LaborIQ, a compensation-data provider.

By another measure, the fates of job switchers and job stayers have diverged even more. According to the Federal Reserve Bank of Atlanta, the wages of job switchers grew by 7.1% in September, compared with a 5.2% increase for job stayers. That gap of 1.9 percentage points is not only greater than it was in the spring - it's the greatest it's been since the Atlanta Fed started tracking the series in the late 1990s.

As annual-review season rolls around, job stayers may be counting on a big bump to get their salaries up to parity. But I bear bad news: As I wrote in October, surveys indicate employers are planning on increasing their salary budgets by an average of only 4% in 2023. Factor in inflation - which came in at 7.7% in October - and that amounts to a sizable drop in real income.

All of which means that employees still have a huge incentive to go job shopping as a means to get a raise from their existing employer. Chances are, in the current market, bosses will feel forced to match a competitor's offer. "Because good talent is so hard to find, if it's a good employee, you're going to consider whatever it takes to make it work," says Reisdorf, the Robert Half executive.

Do you risk upsetting the boss?

So in the short term, playing the field to get a raise from your existing employer could get you a big payout. But is it a good move for your career in the long term? Job recruiters sure don't think so. Every recruiter I spoke with generally advised against accepting a counteroffer from your current employer if you land a new job elsewhere. Of course, it's in a recruiter's interest for candidates to take the new jobs they're offered, but it's worth hearing them out.

For starters, they point out, money is rarely the only reason that people go looking for a new job. So a bigger salary won't solve the underlying problem they have with their current job - whether it's a toxic corporate culture, a lack of work-from-home privileges, or a bad boss.

And even if money is the sticking point, forcing your boss to give you a raise could cost you in the long run. Sure, your manager might feel as if they have to match the higher offer - but they might end up holding a grudge. "If they know that you're shopping, they're always going to be worried," says Gregg Salkovitch, the founder of Right Choice Resources. "It does break a lot of trust."

Lost trust doesn't just mean things will get awkward between you and the boss. It could have implications for your job security in the event of a downturn. And a downturn is exactly where we seem to be headed. Even though there are still plenty of jobs available, experts expect layoffs to pick up in 2023. "If an employee is just trying to leverage an above-market wage from another employer," says LaborIQ's Denton, "and they present that to a manager already having to make tough decisions around layoffs, they might have just made the manager's job easier."

Those are persuasive arguments, and probably true in some cases. But I'm not sure I buy them. They're based on an old assumption - that a display of fealty to your employer is the best way to get ahead in your career. But the pandemic has upended that norm and replaced it with something new. I know plenty of managers who already assume their staff members are constantly looking and accept the offer-counteroffer dance as a normal part of business.

And why should employers take it personally that their workers are shopping around? After all, a committed relationship requires devotion from both sides. Early in the pandemic, employers engaged in what was probably the swiftest round of mass layoffs in US history, leaving more than 20 million Americans jobless virtually overnight. Then, when the economy roared back, they offered big raises to new hires while failing to reward their most loyal staffers. In the Great Rethink of the pandemic, workers have realized that their devotion is being taken for granted. They're treating their job the way they would a neglectful partner: If you liked it, then you should've put a ring on it.

Or perhaps a better analogy is professional sports. Players used to stay with a team their entire career. Then came free agency - and salaries shot up, not just for the players who shopped around but for everyone. In the five years after free agency took hold in Major League Baseball, average salaries soared to $185,651 from $76,066. Independence, it turns out, pays way, way better than loyalty.

Now office workers are making the same move. "There's been this realization that work is no longer a safe place," says Allyn Bailey, an executive director at the hiring platform SmartRecruiters. "So employees have now adjusted that relationship. It's not a paternal relationship anymore. Everybody's moved from being a franchise player to a free agent." And what free agency tells your employer is: Loyalty isn't free.

Aki Ito is a senior correspondent at Insider. 

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