:max_bytes(150000):strip_icc()/GettyImages-641199968-fa70c9b4ca3c4c7e8f11a56b0793925b.jpg "ADP Data Reveals How Much Loyalty at Your Job Is Costing You Each Year")
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Key Takeaways
- In January 2026, employees who stayed put saw nearly two percentage points less yearly pay growth than those who changed jobs.
- Even in today’s “low hire, low fire” labor market, employers continue to pay more to attract new talent than to reward existing staff.
- Inflation makes staying even pricier, eating up much of workers’ raises in recent years.
Staying with your employer comes with a hidden cost. Let’s call it a “loyalty tax.”
Workers who switched jobs saw their pay grow 6.4% year over year in January, compared with 4.5% for those who stayed put. That’s according to ADP, the payroll processing giant.
On a U.S. median salary of $62,608, switching jobs nets about $2,300 more in the first year, based on ADP’s average gap between changers and stayers since 2020. But raises compound on a higher base, so the advantage grows: over five years, the worker who stayed loyal has earned about $13,300 less—enough for more than two years of a typical American’s groceries.
When the Loyalty Tax Peaked
Economists have long known about the gap in annual raises between those who stay at a job and those who jump ship. But earlier this decade, the Great Resignation increased the loyalty tax as employers scrambled to fill a record 12.1 million open positions.
McDonald’s piloted emergency child care to keep workers, Amazon dangled $3,000 sign-on bonuses for warehouse jobs, and employers in the spring of 2022 drove the gap between job-changers’ and job-stayers’ pay growth to 8.4 percentage points, the widest margin in ADP’s dataset.
The ‘Low Hire, Low Fire’ Market
Then the labor market shifted. Data released earlier this week by the Bureau of Labor Statistics showed that U.S. employers last year added only 181,000 jobs, making 2025 the worst year for job creation outside of a recession since 2003. Hiring grew more than expected in January, but most of the roles were concentrated in health care.
“The labor market appears to be stuck in a low hire, low fire environment, with employers prioritizing retaining existing workers over adding new headcount,” said Cory Stahle, senior economist at Indeed.
Data from Indeed and other sources confirms the cooling. Posted wages grew 3.4% year over year in January 2025. By December, that figure had fallen to 2.1%. “That slowdown in posted wage growth mirrors what we are seeing in other pay indicators, including the Atlanta Fed Wage Growth Tracker,” Stahle said.
The gap between changers and stayers has also narrowed steadily.
“Throughout 2024 and early 2025, the wage growth gap between switchers and stayers narrowed, with both groups receiving similar pay increases,” Stahle said. “That gap has started to reopen over the last four readings, but it’s not yet clear whether this is a change in trend and, if so, how long it will last.”
Tip
Even in a cooling labor market, Stahle suggested you don’t have to give up on better raises. “You should always try to negotiate, but you should also be aware of the current hiring climate and demand for your type of work before you come to the table,” he said. “In this uncertain economy, it’s vital to communicate—with certainty—the value you will bring to the role.”
The Raise You’re Not Getting
But even in a market with fewer opportunities and less employer urgency, the loyalty tax hasn’t gone away. That suggests it’s structural: employers are willing to spend more to attract new talent than to reward the people already doing the work. In a frozen market, employers have even less reason to offer generous raises.
Now factor in inflation. Consumer prices rose 2.4% over the 12 months through January, which means the typical stayer’s 4.5% raise shrinks to about 2.1% in real terms. Switchers, by contrast, pocket about 4% after inflation, more than double what stayers get.
Historically, those leaving their jobs have fared better when inflation’s higher. During the inflation surge of 2021 and 2022, rising prices outpaced stayers’ raises. In June 2022, consumer prices rose 9.0% year over year, while stayers’ pay grew 7.8%. ADP and BLS data show that for about 18 months during that stretch, staying put meant watching your purchasing power shrink even as your paycheck inched higher. Those who switched jobs came out well ahead.
Still, this doesn’t mean you should quit your job tomorrow. Switching isn’t easy, especially now. In a “low hire, no fire” market with fewer jobs, workers who want to leave may not have the leverage to go.
Plus, switching has real costs—starting over at the bottom of the vacation calendar, work best friends who become people you’ll “have to grab coffee with sometime,” a new job that looked great on Glassdoor and isn’t. But workers who never test the market aren’t being rewarded for staying. With the loyalty tax, they’re paying for it.
