Job Switching Pays Off Again as Gen Z Leads Wage Gains: Bank of America

Changing jobs is paying off again for American workers, with Gen Z seeing the largest gains, according to a new Bank of America study.

Pay increases associated with switching jobs reached their highest level in more than three years in July, according to an analysis published on Wednesday by the Bank of America Institute. The annual average of those pay gains has also begun to rise after declining for several years.

“Gen Z continue to benefit the most from changing jobs, while workers paid by the hour are also making particularly large gains from switching,” the report said.

The findings are based on aggregated and anonymized Bank of America deposit-account data. The bank estimates pay gains by comparing a worker’s first three months of pay at a new employer with the same three-month period a year prior.

Gen Z Sees Biggest Pay Bump

Gen Z workers—defined by Bank of America as those born after 1995—who changed employers saw their after-tax pay rise by nearly 20 percent in July. That compared with roughly 11 percent for Millennials, 9 percent for Gen X workers, and about 7 percent for Baby Boomers.

Workers who stayed in their jobs received much smaller increases across every generation.

Bank of America said younger workers tend to benefit more from switching because they are typically earlier in their careers and start with lower wages.

“Younger workers generally begin their careers at lower wage levels, creating more opportunities for substantial percentage increases when they switch jobs,” the report said.

“As a result, job changes can generate larger proportional pay gains than those typically experienced by older workers.”

Gen Z workers are also changing jobs more frequently. Their job-switching rate has accelerated on a year-over-year basis since February and recently surpassed every other generation for the first time since 2021.

Bank of America said that could indicate that opportunities remain available for younger workers despite broader signs of slower hiring. But it could also mean employers are favoring lower-cost, entry-level workers over more experienced hires.

Hourly Workers See Large Gains

Workers who receive weekly paychecks also saw particularly large gains from switching employers.

Their pay increases were almost four times that of weekly paid workers who remained in the same job in July. Weekly payrolls are particularly common in industries such as construction, leisure, hospitality, transportation, warehousing, and parts of retail.

Bank of America said some of the increase could reflect more overtime and longer working hours rather than higher hourly wages alone.

The report also said changes under the One Big Beautiful Bill Act could be contributing to stronger income growth among lower-paid workers. The law created a temporary federal income tax deduction for qualified overtime premium pay from 2025 through 2028.

AI Impact Unclear

The report also examined whether the growing use of artificial intelligence is beginning to affect hiring.

Bank of America identified information, as well as finance and insurance, as two sectors to watch. Both had relatively high AI usage and saw labor demand decline during the five months through June.

However, researchers found no clear relationship between AI use and labor demand across the economy.

“In many industries, businesses may still be experimenting with AI tools or using them to augment workers rather than replace them,” the report said.

In a separate study, Bank of America said women and younger workers could be more exposed if AI begins to displace jobs more broadly.

This is because women are more heavily represented in administrative occupations with routine, language-based tasks, while younger workers are more likely to hold entry-level positions containing tasks that can potentially be automated, according to the study.

For now, however, the bank said rising job switching suggests AI adoption has not yet translated into broad-based job displacement.