The past 10 years have seen phenomenal job growth in the United States. This has dramatically reduced the number of unemployed and is making significant headway against the number of part-time workers seeking full-time employment. The labor market is getting much tighter.
But wage growth, while recently improving, continues to lag. There simply isn’t a lot more money coming to existing employees. Even in this tight labor market, many companies are doling out annual raises of just three or four percent. They barely make headway against inflation.
Millennials in particular suffer from under-compensation. Many of them entered the job market during the crash or early in the recovery. They took what they could get, and some employers took advantage.
But times do change. If you think you could personally benefit from some wage growth or increased income, you have several options. There are a variety of ways to increase income, and the time is ripe to do so.
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1. Add a Side Job
There are several pros to taking on a side job, or side hustle, as a way to boost income. It’s probably the easiest way to increase income. You find a part-time job that you can fit into your schedule, and you’re basically set.
In addition to being the easiest method of making more money, a side hustle is also the safest.
You’re not giving up your existing job, and you don’t have the risks of starting a new job that may not go as planned. Additionally, you’re getting some diversification of income. Making money from multiple employers helps protect your downside. If you lose your main job, you still have some money coming in.
The downsides of a side job are that you’re working more hours and that many part-time jobs don’t pay well. Side jobs are a great way to make more money in the short-term; you exchange some of your free hours for additional moneymaking hours, and you have more coming in. But in the long run, they can be draining, and you may not realize your full worth.
2. Add a Side Business
Adding a side business can be a great way to increase income, especially if you have readily marketable skills, such as search engine optimization (SEO) or web design. Many people have skills they can market with minimal investment to get started. A side business also provides you with income diversity. You will often have multiple clients, again insulating you from the risks associated with having just one job.
But there are also additional complications with having a side business. You need to market and find clients, for example. Plus, you add a layer of complexity to your taxes and have additional bookkeeping needs. Theoretically, a side business gives you a great deal of flexibility to work when and how much you want.
Practically, many people find their business to be less flexible than they expect.
A side business isn’t for everyone. It requires a good deal of discipline and responsibility. If it’s something you think you may want to do eventually, working your own business on the side is a great way to test the waters and see if it’s truly something that you’ll want to continue.
3. Changing Jobs
You can consider changing jobs within your current company or changing to another employer. Changing jobs within your company may be an easier way to pick up a modest increase in income, but changing employers may be one of the best ways to achieve a large-magnitude increase.
Working for one employer for an extended period of time often doesn’t push people to do their best. The challenges and growth — professionally or monetarily — rarely keep up.
Staying with an employer often produces three to five percent annual raises. But changing employers could produce an increase of 25 percent or more. It’s a valid way to drive personal wage growth and increase your income.
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Changing your employer has additional advantages, as well. You expand your network. You challenge yourself in new situations and with new people. This expands your confidence and self-worth. You gain a diversity of experience you can’t get if you remain with one employer.
If you consider changing jobs periodically, you can reap even more benefits. We’re not talking about jumping ship at every opportunity, but rather strategically planning on testing the waters and making appropriate moves every three to five years.
If you adopt a mindset of periodically shopping your worth, you will find you do a number of things differently.
You will be very cognizant of growing and maintaining your network. And you’ll be strategic about it, considering both whom you can help and who can help you. After all, you may want to bring some talent with you to a new employer. It’s no longer a one-way street.
Keeping yourself poised for new opportunities forces you to focus on your own personal brand, who you are, and what you do. You will be very aware of continuing to refine and improve your brand, thus raising your worth in the marketplace.
Naturally, there are increased risks with changing employers. Every new job is both an opportunity to excel and an opportunity to not excel. You need to be strategic.
Wages are often the biggest part of your compensation, but they’re not the only consideration. For example, health benefits vary widely from employer to employer. These benefits often have waiting periods, and you may need to maintain health insurance or other benefits as a bridge until your new ones kick in.
You’ll have additional work to do in terms of maximizing your potential and marketability. And if you need to move, that adds a whole level of complexity to your decision.
But risk, as always, is a double-edged sword. Certainly, there’s the risk of taking a new job and not having it work out as planned. On the other side of that, there’s the risk of remaining in a job that neither challenges you or rewards you appropriately. One’s a crash and burn, the other’s a slow decline. Both are risks.
It’s always a good idea to consider where you’re going before starting out. If you have an idea of what you want from life and from work, then the appropriate next steps should be fairly clear.
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Whether it’s a little boost in income from a side job, setting the stage for entrepreneurship through a side business, or leaping up to the next level with a new employer, you have choices for ways to increase income. Perhaps you only need a small step. Perhaps you’re not getting what you should and you need a big change. The American economy is on a tear. Companies are looking for good talent.
No matter what, you do you should carefully consider the finances of your options, weighing the pros and cons. Consider both near-term and long-term possibilities.
If you want to get ahead financially, you can either increase income or reduce costs. It’s not fun to reduce costs. Okay, for some people it apparently is, but not for most. Besides, you can only cut costs so far. The potential to increase your income is bounded only be what you’re willing and able to do. Is it time for you to create your own wage growth?