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Does loyalty to your employer pay off?

In this edition of the newsletter we’re doing a deep dive on whether or not loyalty pays off in your career. For the millennial subscribers, we know Ned from the Try Guys wasn’t so loyal - should you follow suit? (Just within your career, come on)

I’m also running a giveaway to thank those who are helping spread the word about Big 4 Transparency online. I’ll be giving out $250 + a pizza party each month from October to December of this year, plus $100 in September. For full details, click here.

Are you an accountant with under 3 years of experience looking to break into tech? I know I was 2 years ago, and would have benefitted from this service

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Sounds good? Yeah it does. Get started with your process here.

And now for the numbers!

First of all, what’s a loyalty tax?

It’s the concept that employees who stay with their employers for longer may be underpaid when compared to those who change employers.

For this analysis, I compared average salaries between external hires and internal promotions. To keep the data standardized, I only looked at salaries in the United-States and with entries in 2022.

When comparing 2nd year Analyst salaries, external hires were paid 4.7% more than internal promotions. At Big 4 firms, that difference increased to 8%. For first year Seniors, external hires were paid 12.5% more than internal promotions, and the difference rose to 14.2% at Big 4 firms. For first year Managers, external hires were paid on average 13.5% more overall, and 18.5% more at Big 4 firms.

Finally, for first year Senior Managers, external hires were paid 11.5% more overall. I excluded the numbers comparing the difference for Big 4 firms as the sample size was beginning to get too small to be very reliable.

To be sure that this wasn’t due to some bias of people moving to bigger and higher cost of living cities to chase a promotion at a new firm, I reran the numbers for only New York City responses and got directionally similar results.

Now, a word of caution that especially at the more senior levels, it may not always be smart to jump to another employer given the reputation and relationship building that may be needed to progress further. It is however very interesting to see this difference in compensation, and this information may be useful in future pay negotiations or career choices.

And finally, if you’re looking to spice up your career, look no further!

Here are the opportunities on the Big 4 Transparency Job Board:

1. CFO Associates is hiring a Senior Tax AccountantRemote, USA$60k - $90k

2. Deloitte Bermuda is hiring an Audit SeniorRelocation to Bermuda funded by the firm$80k + Bonus

3. Dark horse is looking to support CPAs to launch their own practiceRemote, USAEarnings uncapped, based on your entrepreneurial success

4. Onchilles Pharma is hiring a Senior AccountantSan Diego, USA$90k - $112k

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