After 10 years of lackluster growth, wages finally broke the 3% ceiling in August 2018, and have done so every month since. With workers quitting left and right to pursue better opportunities, employers have finally had to crack open their coffers and offer raises to remain competitive.
In fact, nearly 50% of employers have made a counter-offer of significantly higher pay to keep an employee on staff, according to the results of a recent ZipRecruiter survey. But even the most generous of offers may not be enough to stop top talent from jumping ship in search of a better opportunity.
While offering a raise is certainly worth a shot given the growing labor shortage, our survey shows some employers are waiting too long to make their bid. In many cases, the offer just can’t compete with today’s going market rate, while in others it seems employers have missed the message that some workers value better benefits over higher pay.
Employees on the Way Out Demand A Lot More
Even with the incredible leverage it provides, not all employees are interested in using a new job offer to negotiate with their employer. Only 18% of the 3,000+ job seekers we surveyed said they’ve used a job offer as leverage to get a raise in the past. But for those who are open to a counteroffer to stay, the price is high.
About 38% said they would consider a counteroffer to stay at their current job if they had plans to pursue a new opportunity. But when asked how much of a raise they would need to be persuaded to stay, the job seekers we surveyed said they would need an average 33% increase.
According to our survey, this is way off the mark of what most employers are offering. Among those who have offered an employee higher pay to stay, the average increase on the table was 10%—far above the typical bump of 2.5%-5%, but still nowhere near what it would take to win-over most employees.
Better Pay isn’t the Only Way to Get Employees to Stay
People don’t quit just for a bigger paycheck. In some cases the lure of better benefits is too strong to resist, and employers have clearly responded to the competition for talent by offering more benefits to new hires: The number of jobs posted to ZipRecruiter mentioning healthcare or retirement benefits increased 70% in January 2019 year over year.
But our survey suggests employers have yet to pump-up benefits packages enough to keep existing employees. Fifty-two percent of the employers we surveyed said they offered higher pay as an incentive to keep their best workers from jumping ship, while a scant 1.4% said they offered a better benefits package.
Unfortunately, employers may be unaware of just how valuable taking this extra step could be— 47% of the job seekers we surveyed said they would consider accepting a counteroffer that included better benefits rather than a higher salary.
Some Job Seekers Still Don’t Know They’re in the Driver’s Seat
In a survey of more than 50,000 job seekers conducted by ZipRecruiter last year, we learned that many job seekers are unhappy with their pay, yet most (64%) said they did not negotiate for a higher wage when they were offered the job. And only 40% of respondents said they had received a raise in their current or most recent job.
This take-it-or-leave-it attitude toward salary negotiation suggests employees are more likely to search for a new job that offers the pay and benefits they need than they are to ask for more money from their current employer.
There’s a lesson here for job seekers and employers alike. Job seekers don’t need to quit their current job to get the compensation they deserve. If you like where you work and you’re only looking for a new job to improve your financial situation, it’s worth it to give your employer the chance to keep you. However, it’s clear from both the results of this survey and the prevailing job market trends of the day, that employers need to be more proactive about retaining their top talent.