Pay increases associated with changing jobs rose in July to their highest rate in more than three years, according to a Bank of America Institute report published yesterday based on the bank’s internal deposit account data.
The annual average for job-switching pay premiums has moved higher after consecutive years of declines, the report said, though premiums remain below pre-pandemic levels.
The premium was most pronounced among workers with weekly paychecks. In July, the after-tax pay change for weekly-paid workers who switched jobs was almost four times that of those who stayed in their positions. The report said the gap could partly reflect increased overtime. Weekly pay schedules are concentrated in industries with large hourly workforces, including construction, leisure and hospitality, transportation and warehousing, and parts of retail.
Gen Z workers continued to see the largest pay gains from switching roles. The rate at which Gen Z change jobs has accelerated year over year since February and now exceeds that of every other generation for the first time since 2021.
Women still receive larger raises than men when changing jobs, but the difference between the two has returned to roughly 2018 levels as men’s switching premiums accelerated faster. Men’s job change rate has edged past women’s since 2024. The gap between women’s and men’s pay disruption rates, a proxy for labor force departures, has also narrowed, with both rates moderating this year.
On artificial intelligence, the report said adoption is not yet translating into broad-based labor displacement. Using Census Bureau survey data on AI usage, BofA Global Research identified two industries with high usage and declining labor demand between January and June: information, where job openings plus employment fell 1.9%, and finance and insurance, where the measure fell 1.1%. Across all industries, it found no clear relationship between AI usage and labor demand growth.
The report said women and younger workers appear most exposed should AI effects materialize. Citing the International Labor Organization, it noted women are overrepresented in administrative roles with routine, language-based tasks. A LinkedIn study cited in the report found women made up just over a quarter of new hires in AI-related roles in the US last year, compared with half of new hires in non-AI occupations.
