Job Hop ROI

Why changing jobs outpaces internal raises

Internal raises are benchmarked against what you already earn. External offers are benchmarked against the market. Over a decade that difference compounds into a gap most people find larger than they expected.

How it works

• Compounds a modest annual raise across the period to show the staying path.
• Compounds the same annual raise but replaces it with a larger step at each move.
• Compares the two end salaries, which is where the compounding becomes visible.

staying  = salary × (1 + internal raise)^years
moving   = apply internal raise in ordinary years,
           and the move increase in switching years

typical: internal 3%, external step 15% every three years

Worked example

Starting at 90,000 over nine years: 3% internally each year, against switching every third year for a 15% step instead.

1. staying: 90,000 × 1.03⁹ = 117,430
2. moving: 3% in years 1–2, then 15% in year 3, repeating
3. after the first move (year 3): 109,803
4. after the second (year 6): 133,962
5. after the third (year 9): 163,440

163,440 against 117,430 — a gap of 46,011, or 39% more, from three job changes. The advantage comes almost entirely from compounding: each move raises the base that every later raise applies to.

Reading the result

• This models salary only. Frequent moves cost you vesting cliffs, pension continuity, accrued leave, notice-period protections and internal reputation, none of which appear in the calculation. Equity in particular is designed to punish leaving early.
• The 15% figure is not guaranteed. It reflects a market where you are in demand; in a weak market external moves may offer nothing above your current pay, and the whole advantage disappears.
• There is a real cost to always being new. The first six months in any role are lower-output and higher-stress, and a pattern of very short stays does eventually raise questions in hiring.
• Internal raises can be renegotiated. A credible external offer is the strongest lever most people ever have — sometimes the arithmetic above is best used as an argument for staying, not a reason to leave.

Common questions

Is switching jobs always financially better?

Not always, but the compounding is real and large. In the example, three moves over nine years produce 39% more salary. The counterweights are unvested equity, lost continuity, and the risk that a move lands badly — which is why the calculation is a starting point rather than an instruction.

How often is too often?

There is no fixed rule, but stays under about eighteen months repeated across a career do get noticed, and equity cliffs mean leaving before the first anniversary often forfeits everything granted. Two to four years tends to capture most of the compounding benefit without the drawbacks.