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Over the past few years, tens of millions of Americans have switched jobs, lured by big pay raises and abundant job opportunities, a trend economists have dubbed “the Great Quitting.”
But as the labor market settles into what economists at Bank of America are now calling “the great hesitancy,” this may finally be coming to an end.
Fewer people appear to be switching jobs, according to a new report from the Bank of America Research Institute based on internal data: As of May, the number of workers changing jobs averaged about 3%, down sharply from nearly 3.75% in mid-2022.
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In 2021 and 2022, an extremely tight labor market led to unprecedented numbers of workers leaving their jobs as many sought better wages, working conditions, and hours.
A sign for a job fair hangs on 5th Avenue in Manhattan on September 3, 2021 in New York City. (Reuters/Andrew Kelly/Reuters Photo)
Switching jobs was a lucrative move for many Americans during this time: Workers who switched jobs in July 2022, at the peak of the Great Resignation, received an 8.5% annual pay increase, compared with a 6.7% increase for workers who stayed in their jobs. data Issued by the Federal Reserve Bank of Atlanta.
This rapid wage growth has High Inflation 2022 and 2023.
But there are signs that job-switchers are getting smaller raises from their new employers than in the past: At the “height” of the mass quits, job-switchers received a median raise of more than 20%, according to Bank of America. But as of May 2024, that figure has plummeted to about 10%.
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A recruiter talks with job seekers at the Miami-Dade County Job Fair on December 16, 2021 in Miami, Florida. (Eva Marie Uzcategui/Bloomberg via Getty Images/Getty Images)
“It’s notable that this figure is below 2019 levels,” the economists wrote. “This continued downward trend suggests that the labor market is no longer as tight and that the balance of power between employers and employees is again tilting in favor of employers.”
The slowdown in salary increases when switching jobs was most pronounced among middle- and upper-income Americans, which may suggest that these people have less bargaining power and influence when negotiating salary increases that come with switching jobs.
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Conversely, low-income Americans still see the biggest average salary increase when they change jobs.
Job seekers visit booths during the Spring Job Fair on April 15, 2022, at the Las Vegas Convention Center. ((KM Cannon/Las Vegas Review-Journal) / Getty Images)
The labor market has been historically tough over the past year, defying the expectations of economists who have predicted an economic slowdown and expect it to continue to cool in coming months as rising interest rates push the economy along.
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of Federal Reserve The U.S. government has raised interest rates 11 times since March 2022 in an effort to tame inflation and cool the labor market. Policymakers have suggested that rapid wage growth, the product of a robust labor market, is contributing to the inflation crisis that has ravaged the wallets of millions of Americans over the past few years.
The decline in job hopping is the latest sign that the labor market is starting to weaken in the face of rising interest rates and persistent inflation.
“Salary increases from job changes were slightly below 2019 levels, which may suggest that the balance of bargaining power has shifted somewhat away from workers, especially for middle- and upper-income job changers,” the Bank of America economists wrote. “This could signal that wage growth across the economy may slow even without a particularly large increase in the unemployment rate, which is likely to be good news for consumers and the Fed.”
