Latest / Job Hopping with Fexingo: Tenure, Loyalty, and the Modern Career Resume / How a Four-Year Stay Reshapes Your Lifetime Earnings
Transcript
- Lucas: So we've spent two episodes looking at why people leave jobs and why counteroffers tend to backfire. But there's a quieter, less flashy question that I think gets shortchanged in the 'job hop to the top' conversation: what happens when you actually stay? Luna: You mean the narrative that says loyalty is a trap and you should move every two years — is that not universally true? Lucas: It's not a lie, but it's incomplete. And there's a specific data point I want to anchor on. The Federal Reserve Bank of Atlanta runs this wage growth tracker — it's pretty granular. And if you look at workers who stay at a company for four years versus those who leave every two years, the stayers end up earning about 12 percent more over the subsequent 20 years. That's after controlling for industry, education, and geography. Luna: Twelve percent is not trivial. But that seems counterintuitive when every career blog says you need to move to get raises. Lucas: Right, because the conventional wisdom is built on a simple truth: external hires usually get a 10 to 20 percent bump, while internal raises are maybe 3 to 5 percent annually. But that math misses how tenure affects the base that those percentages are multiplying. Luna: So you're saying the longer you stay, the bigger the base for the next external jump? Lucas: Exactly. And it's not just about waiting for a bigger number. There's a curve — I call it the experience premium curve. In the first year at a company, you're a net cost: you're learning systems, building relationships, making mistakes. The employer is investing in you. Year two, you break even. Years three and four — that's when you generate the most value per dollar of salary. You know the shortcuts, you have political capital, you can actually execute faster than someone new. Luna: So the employer is getting a bargain in years three and four, relative to what you're paid. Lucas: They are. And the data suggests that if you leave before that window, you're trading away the period where you have the most leverage for a salary negotiation. Because when you're in that sweet spot, you can go to your boss and say — not in so many words — 'I'm producing at a level that would cost you 30 percent more to replace.' And sometimes that internal raise happens. Luna: But most people don't get that raise. The data on internal promotions still shows slower salary growth than external moves. So how do the stayers actually capture that value? Lucas: That's the critical nuance. The 12 percent premium comes from a combination of factors, not just base salary. First, retirement contributions: many companies match a percentage of salary, and if you stay long enough to get fully vested, that's real money compounding. Second, promotion timing: companies often have minimum tenure requirements for senior roles — three years is common at Fortune 500 firms for director-level. If you leave every two years, you disqualify yourself from those internal career ladders. Luna: So you're trading the chance at a director promotion for a lateral move at a higher salary. Lucas: Exactly. And sometimes that trade is worth it. But the Fed data suggests that, on average, the people who take the long view end up ahead. Let me give you a concrete example. A manufacturing engineer in the Midwest — let's call her Sarah. She starts at a plant at $65,000. Colleague Mark starts at the same plant same year. Sarah stays four years, gets promoted to senior engineer at $78,000, then leaves for a competitor at $95,000. Mark leaves after two years for $80,000, then after another two years for $92,000. By year ten, Sarah is at $115,000 because she built a reputation and got a bigger jump. Mark is at $105,000. Not a huge gap, but it compounds. Over 20 years, that's about $140,000 difference in total earnings. Luna: And if you factor in that Sarah's 401k match was fully vested and growing for longer, the gap widens. But I want to push back — because I know people in tech who moved every 18 months and their salaries exploded. Lucas: Absolutely. The tech sector is an outlier. Median tenure in software is about two years. And in high-demand specialities — machine learning engineers, cloud architects — moving every year can double your salary in five years. But that's not the norm across the broader economy. The Fed data covers all industries, and the majority of workers are in sectors where tenure still matters: healthcare, education, manufacturing, government. Luna: So the 'job hop to win' advice is really advice for a specific slice of the labor market. Lucas: It's advice for people with highly portable, high-demand skills in a hot market. Which is valid, but it gets generalized as universal truth. And that can be damaging for someone in, say, nursing or accounting, where relationships and institutional knowledge are heavily valued. Luna: I have a friend in SaaS sales who moved every 18 months for five years and went from $50,000 base to $95,000 base plus commission. She's now at a point where she can't get promoted because she doesn't have a three-year tenure anywhere. So the strategy has a shelf life. Lucas: That's a perfect illustration. The strategy works until it doesn't. At some point, employers want to see depth. And there's a specific research paper I want to mention — from the National Bureau of Economic Research, 2023 — that found that workers who change jobs more than five times in their first ten years in the workforce earn 8 percent less by age 40 than those who change three or fewer times. The pattern flips after you've established yourself. Luna: So the early hopping gives you a boost, but then you need to settle in to consolidate gains. Lucas: Yes. And that brings us to the practical framework. The decision to stay or leave should depend on two things: your industry's median tenure, and where you are on the experience curve. If the median tenure in your field is under three years — tech, consulting, media — then moving frequently is expected and you won't be penalized. But if it's over five years — healthcare, utilities, government — then leaving too soon signals you're a flight risk, and you lose the internal promotion path. Luna: And what about the experience curve? How does an individual know if they're in the sweet spot? Lucas: A rough rule: you've hit the sweet spot when you can do your job without asking for help, you know who to talk to to get things done, and you're mentoring newer people. That usually happens between year two and year three. If you leave before that, you're leaving when you're still a net cost. If you stay past year four without a promotion, you're probably undervalued and should start looking. Luna: So the optimum is around three to four years, then reassess. Lucas: That's consistent with the data. And the Fed's wage tracker shows that the biggest penalty is for people who leave before the two-year mark repeatedly. That pattern — three jobs in six years, each under two years — correlates with lower lifetime earnings even in high-salary fields. Recruiters start wondering about commitment. Luna: I want to loop back to something you said earlier about retirement contributions. That's a hidden factor people don't think about when they're chasing a $10,000 raise. If you're not vested, you're leaving money on the table. Lucas: Huge. The typical vesting schedule is three to four years. If you leave at two years, you forfeit the employer match for those two years — that could be 4 percent of salary per year, compounding. Over a career, that's tens of thousands of dollars. And there's also the intangible: the longer you stay, the more likely you are to be considered for stretch assignments, leadership training, and mentorship. Those accelerate your earnings in ways that don't show up in the base salary figure. Luna: So the advice 'never accept a raise less than 10 percent' ignores that staying could yield a 12 percent lifetime premium if you include all the compounding factors. Lucas: Exactly. The 10 percent rule works if you're comparing two salary offers on the same day. But it breaks when you model out 20 years. And that's the real point: career decisions should be evaluated over decades, not in a single job change. Luna: If today's episode was useful to you and you want to keep it ad-free, buy me a coffee dot com slash fexingo helps. We don't run ads, and that's a deliberate choice. Joe and a few other listeners chip in monthly through that link — it's literally what funds these conversations. Lucas: Yeah, it keeps us independent. And we're grateful. Okay — back to the data. The other piece I want to highlight is that the 12 percent premium isn't evenly distributed. It's much stronger for women and for workers without a college degree. The explanation is that those groups face more friction in the job market — they get less information about opportunities, and they face more scrutiny from recruiters if they have short tenures. So staying actually protects them from wage penalties that men with degrees don't suffer as much. Luna: So the stay strategy is especially powerful for groups that are historically disadvantaged in negotiations. Lucas: Yes. And that's a nuance that the 'always negotiate' advice misses. If you're in a position where you have less leverage to begin with, building internal credibility over several years can be more effective than trying to leverage a competing offer. Luna: Let's talk about exceptions. When does leaving early make sense even if you're in a long-tenure industry? Lucas: Three clear cases. One: your manager is toxic and you've tried to resolve it — life's too short. Two: the company is in decline — layoffs, budget cuts, loss of market share. Three: you've developed a skill that's suddenly in high demand, like AI expertise in 2024 and 2025. In that case, the market premium is so large that staying is leaving money on the table. Luna: So the framework is: stay until you've hit the sweet spot, then leave only if the external opportunity is significantly better, not just modestly better. Lucas: Right. 'Significantly' meaning 20 percent or more in total compensation, or a clear step up in role and responsibility. Anything less than that, and the compounding effects of tenure probably make staying the better bet. At least that's what the aggregate data says. Luna: And what about internal promotions? If you get promoted at year three, do you reset the clock on the experience curve? Lucas: Great question. You partially reset. The first year in the new role is again a learning period, but you retain institutional knowledge and relationships. So the next sweet spot comes faster — maybe by year two in the new role. The ideal pattern is: get promoted internally every three to four years, and only make external moves when the internal ladder stalls. Luna: That's the pattern that produces the highest lifetime earnings in the Fed data, right? Lucas: That's exactly what the data shows. People who have at least one internal promotion before making an external move earn more over 20 years than those who always move externally. The internal promotion signals to the next employer that you're valued enough to be retained. Luna: So the resume that shows four years at one company and a promotion is stronger than a resume with two two-year stints. Lucas: Yes, and the reason is that it signals both competence and commitment. Recruiters interpret short tenures as either the employee is hard to work with or the company is unstable. Either way, it's a red flag. A four-year stint with a promotion says 'this person is good and they stay long enough to matter.' Luna: I think the takeaway for our listeners is: don't blindly follow the job-hopping trend. Understand your industry's norms, and do the math over 20 years, not 2. Lucas: Exactly. And the next time someone tells you 'loyalty never pays,' ask them for the data. Because the Fed's data says something more interesting: sometimes the most strategic move is to stay put and grow where you're planted.