Is Your Salary Too High for Today’s Job Market?
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Visit us at pgm.com forward slash ETFs. Here's your money briefing for Wednesday, May 21st. I'm Derek Dennis for The Wall Street Journal. Imagine coming to the realization you're overpaid in the workplace. Many workers are discovering they are after finding out the salary they commanded just a few short years ago isn't what they would earn now in an uncertain economy.

What stings for some of these workers is it's not like they're failing to live up to the deals that they sign necessarily. It's really more that the wages are beginning to fall in tech and some other industries. We talked to Wall Street Journal columnist Callum Borshers about how some workers are facing the prospect that a smaller paycheck might be in their future. That's after the break. This message comes from Viking, committed to exploring the world in comfort.

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High earners are finding they have to adjust their salary expectations in today's cooling job market. Wall Street Journal On The Clock columnist Callum Borshers joins me. So, Callum, what changed?

Well, the short version is that the pandemic era talent war that goosed the earnings of so many Americans came to an end. And so what we see now is more job switchers having to settle for lateral moves or maybe even taking pay cuts than a few years ago and even more than a few months ago. So do you think it was a good thing for workers to seek out jobs that offered a big pay increase? Are they being punished for that now?

I mean, look, far be it from me to say people shouldn't have taken big raises. But I think the second guess is this. Were you realistic about your income trajectory? So some people I talked to say they knew all along that their offers were inflated by this once in a generation hiring frenzy. They sort of figured a correction was coming. And so they've played it pretty conservative with their personal finances.

But others say they sort of thought their paychecks were on this like rocket ship that was going to go up forever and ever. And I think those are the ones who are sweating a little bit. I spoke with more than two dozen of these people who job hopped during the talent war, and some of them do think they're being punished now. I talked to somebody who said he tripled his total compensation when he joined Meta, for example, and he suspects that's one reason why he was later laid off. Another person who was a sales manager had a really generous incentive plan and

And she says her boss started implying she'd become overpaid before she too was laid off. You know, I was surprised to read in your story that there were people who actually admitted to being overpaid. Yeah, I sort of was too. The data point that really stood out to me was this recent workforce report found that two-thirds of workers self-reported being paid at or above the going rate for their skills.

I think a layer of this that's important is just the salary transparency era that we're in right now. And I realize it's not in every single city or every single state, but more and more people can see jobs like their own listed on job boards. And you can see what the advertised salary is these days. And so it's really hard to kind of ignore the reality. If you make way more than the going rate listed on advertised jobs today, then guess what? You're probably overpaid.

Love the trend towards salary transparency for sure. But on the other side, are employers being haters here looking at pay more than performance? I guess I'd say they're being transactional. That's the way I'd put it. They say, look, you were market rate yesterday, but today you're overpaid. Some of the folks who say that their pay spiked in recent years told me they do take some assurance in the other bit of the math equation, which is what would be the replacement cost.

So they say, I don't necessarily worry so much about being replaced by cheaper talent because I know it would cost my employer some money to go out and recruit and then train somebody to replace me. And that might negate the savings. So I'm feeling like I'm going to be OK.

In your reporting, you write about workers who were heavily recruited just a few years ago and then not so heavily today. What changed? The biggest change is just that the economy revving back up after the pandemic created really intense demand for a lot of roles and especially for certain roles. I mean, I'm thinking of somebody like Paige Sheldon, who I spoke with. He's an accountant in Colorado. He switched jobs twice in one year and increased his pay by almost 50 percent in those two moves.

And he said he really benefited from a surge in demand for CPAs at that time, right? There were a lot more deals happening as the economy was turning back on. That's very different from today, he says, when you see tariffs and general economic uncertainty that are cooling the deal making and merger activity. And somebody like him says he would expect a lateral move or maybe losing some work from home flexibility if he had to switch jobs today.

How do employers even determine who's being overpaid? Aren't these the same employers who agreed to the pay packages in the first place? Yeah, there is a certain hypocrisy to that, I suppose. What stings for some of these workers is it's not like they're failing to live up to the deals that they sign necessarily. It is really more that the wages are beginning to fall in tech and some other industries. And as we said, this pay transparency development makes it more apparent that

And what does the research say about workers changing jobs, getting either a pay increase or decrease? You don't have to hit the panic button here in the sense that most people who are changing jobs today are still getting some bit of a pay raise. It's just happening less often. So ZipRecruiter does this quarterly report on new hires. And so in the latest version from the first quarter of this year, they still found six in 10 people who recently changed jobs got a pay bump. That's still more than half.

But it's well down from 73% in just the fourth quarter of last year, right? So 73 down to 60%. It's a pretty big drop. And just for bigger perspective, I mean, we can all flash back to three years ago. You go back to 2022, almost half of the people switching jobs back then were pocketing double digit raises. So we're clearly in a different environment than we were. So what's an employee to do, especially those who bought homes, cars, or other big dollar items on those higher salaries? Maybe.

Maybe pad your savings. Jacob Tim, another person I talked to, really offers a good example of how you can manage the situation. He's a software engineer. He got a 70 percent earnings boost, he said, in two job moves in less than a year at the height of the talent war. But he said, you know, he has sort of come to realize in recent months that things have cooled off. He keeps his eye on job boards, recognizes that he's paid on the high side, especially for a fully remote job like he has.

Whereas he and his wife used to keep maybe three to six months worth of expenses in a reserve fund. Now they're keeping nine months in an emergency fund. And so I think that's a good model. If you recognize, hey, I'm maybe overpaid these days. And if I had to go find new work today, heaven forbid, would I be able to match it? Maybe pad that savings account a little bit and

And so I think that for workers, the message there is to keep an eye not just on what's your own paycheck, but also what's the broader environment and be realistic. Are you on a trajectory that's going to go up and up and up forever? Or do you need to prepare for the possibility that you might have to at some point take a step back pay wise, only to hopefully take two steps forward in the future?

That's Wall Street Journal on-the-clock columnist Callum Borschers. And that's it for your Money Briefing. This episode was produced by Ariana Asparu with supervising producer Melanie Roy. I'm Derek Dennis for The Wall Street Journal. Thanks for listening.

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