More Americans are job-hugging as switching employers doesn’t pay like it used to
With rising layoffs and fewer openings, job changes now bring the smallest relative pay bump in a decade — and workers are sticking where they are.
Long gone are the days of the Great Resignation.
Indeed, America’s labor market is increasingly in “hire less, fire more” mode — a subtle shift from the “hire less, fire less” pattern seen over the summer — and it’s weighing on those that are thinking about quitting their jobs.
The second part of that trend can be seen at some of America’s biggest employers, with Amazon, UPS, Target, and Microsoft all announcing plans to cut staff recently. October even logged the highest number of announced job cuts among US employers since 2003, according to outplacement firm Challenger, Gray & Christmas (though we’ve missed official government jobs data for the last two months due to the federal shutdown).
Meanwhile, the hiring rate for unemployed workers has fallen to a four-year low in the same month, per the Chicago Fed. And with companies shrinking their teams, job-hopping has given way to a lot more job-hugging as workers resist the pull of a new job.
One clear sign of this slowdown is the quits rate, a proxy for workers’ willingness and ability to leave jobs. While it’s been trending down steadily since peaking at 3% in early 2022, the quits rate has dropped to 1.9% as of August, the lowest since 2015 outside the pandemic shock.
And that stay-put mood seems likely to persist: employees are more likely than ever to stick with their current jobs over the next six months, per Eagle Hill Consulting’s Employee Retention Index, which climbed to a record high in Q3.
Plenty of factors nudged the index higher, including stronger confidence in leadership, better culture scores, and dimmer views of the outside job market. But the biggest lift came from workers feeling more satisfied about their current compensation — and how much it can grow where they are.
That instinct is spot-on: switching jobs isn’t as lucrative as it used to be.
Per the Atlanta Fed’s data, people who have switched jobs have historically seen faster wage growth than those who stayed put — a premium that’s averaged roughly 1% over the last decade, and was as high as 2.2% during the 2022 hiring frenzy. Now, that gap has all but evaporated this year, with the premium shrinking to just 0.1% in August, the smallest since 2010.
