What's the worst kept secret in the world of work? Too much loyalty doesn't pay.
On average, working at the same company for over two years will make you earn at least 50 percent less over your lifetime. And 50 percent is a conservative figure, writes
Forbes contributor Cameron Keng.
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“The problem with staying at a company forever is you start with a base salary and usually annual raises are based on a percentage of your current salary. There is often a limit to how high your manager can bump you up since it’s based on a percentage of your current salary," explained Bethany Devine, a senior hiring manager who has worked with Intuit and other Fortune 500 companies.
“However, if you move to another company, you start fresh and can usually command a higher base salary,” she noted.
The average pay raise this year will be 3 percent, Keng noted. Underperformers can expect about a 1.3 percent pay hike, while top performers may get about 4.5 percent, at best.
But the current official inflation rate is 2.1 percent, which means many people get raises that barely cover the increasing cost of living, if at all.
By comparison, people who quit and move on are likely to see a salary increase of 10 percent to 20 percent. In extreme instances, finding a new employer can boost one's pay by 50 percent, writes Keng.
Companies clamped down on raises during the recession, which is understandable, but that was meant to be a temporary measure. Instead, Keng says it's become “the norm” and Americans have accepted it.
That acceptance is extremely costly and if people would only have the courage to own their careers, it would have a huge impact on their finances, notes Keng.
Companies are tight-fisted with pay increases because they're focused on their balance sheets. As an individual you’re a CEO of one and you have a duty to maximize your profits, he added.
From the data, Americans are not doing too well boosting their personal profitability.
More than a quarter of Americans have no emergency savings, according to an annual Bankrate survey. Of those who do have savings, 67 percent have less than six months of expenses, what Bankrate calls the recommended amount, says
USA Today.
The problem: Flat wage growth, high household expenses and, in the case of young adults, student loan debt, have all made it difficult for Americans to prioritize saving, says Greg McBride, chief financial analyst at Bankrate.
And the picture isn't getting brighter. The percentage of respondents who said they have no emergency savings has fluctuated between a low of 24 percent and a high of 28 percent since 2011, USA Today says Bankrate data show.
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