The Bottom Line:
- The Great Resignation, a phenomenon of increased job-hopping and higher pay for job switchers, is now subsiding.
- Fewer people are quitting their jobs, and gross hiring has also decreased, suggesting a more stable and cohesive workforce.
- Pay bumps for job hoppers have been declining, indicating a return to pre-pandemic levels.
- The cooling labor market may be good news for inflation, but not necessarily for individuals seeking significant pay increases.
- Economists are divided on the overall outlook for the labor market, with some expressing concerns about a potential weakening, while others remain more optimistic.
The Waning of the Great Resignation Phenomenon
Job Switchers No Longer Receiving Significant Pay Bumps
The trend of workers receiving substantial pay increases by switching jobs has diminished significantly. ADP’s data reveals that at the peak of the Great Resignation, job switchers were experiencing year-over-year pay gains roughly double those of job stayers. However, since the beginning of 2022, this dynamic has shifted, with fewer people quitting their jobs and less gross hiring overall.
Increased Job Stability and Productivity
As workers are staying in their roles for longer periods, teams are becoming more cohesive, and employees are gaining more skills and expertise in their positions. This increased job stability not only benefits the workers themselves but also the businesses, as they no longer need to invest as much time and resources in recruiting and onboarding new employees who may leave after a short period.
Implications for the Labor Market and Inflation
The waning of the Great Resignation phenomenon has implications for both the labor market and inflation. While the current labor market remains relatively strong, with corporate profit margins remaining healthy, there are some signs of cooling. However, most economists are not overly concerned about the labor market’s stability at this point.
The reduced turnover and decreased pay bumps for job switchers are expected to have a positive impact on inflation. As wage growth moderates, it may help to alleviate some of the inflationary pressures that have been a concern in recent months. While this may not be the best news for individuals seeking to maximize their earnings through job changes, it is generally seen as a positive development for the overall economy.
Declining Job Hopping and Hiring Trends
Fewer Workers Switching Jobs and Reduced Hiring
Since the beginning of 2022, there has been a notable decrease in the number of people quitting their jobs and a reduction in overall gross hiring. This shift indicates that workers are increasingly choosing to stay in their current roles rather than seeking new opportunities elsewhere. The ADP data, which separates pay insights for job switchers and job stayers, highlights that the significant pay advantages once enjoyed by job switchers have diminished.
Enhanced Team Cohesion and Skill Development
As employees remain in their positions for extended periods, teams are becoming more cohesive and efficient. Workers are able to develop a deeper understanding of their roles and acquire new skills, leading to increased productivity and expertise. This stability not only benefits the employees themselves but also the organizations they work for, as businesses can reduce the time and resources spent on recruitment and onboarding processes.
Potential Effects on Inflation and Individual Earnings
The decline in job hopping and the associated pay bumps may have a moderating effect on inflation. As wage growth slows down, it could help ease some of the inflationary pressures that have been a concern in recent times. However, for individuals who were hoping to capitalize on the Great Resignation trend to boost their earnings, this shift may be less favorable. Despite this, the overall stability of the labor market remains relatively strong, with corporate profit margins holding steady, and most economists are not overly worried about the current state of the job market.
Pay Bumps for Job Switchers Returning to Pre-Pandemic Levels
Diminishing Pay Advantages for Job Switchers
As the Great Resignation phenomenon wanes, the once substantial pay increases enjoyed by job switchers have diminished significantly. ADP’s data reveals that at the peak of this trend, those who switched jobs experienced year-over-year pay gains nearly double those of employees who remained in their roles. However, since the beginning of 2022, this gap has narrowed considerably, with fewer people quitting their jobs and a reduction in overall gross hiring.
Increased Employee Retention and Skill Development
The shift towards longer tenures in current roles has led to more cohesive and efficient teams. As employees stay in their positions for extended periods, they gain a deeper understanding of their responsibilities and acquire new skills, resulting in increased productivity and expertise. This stability benefits not only the workers themselves but also the organizations they work for, as businesses can allocate fewer resources to recruitment and onboarding processes.
Potential Impact on Inflation and the Labor Market
The decline in job hopping and the associated pay bumps may have a moderating effect on inflation. As wage growth slows, it could help alleviate some of the inflationary pressures that have been a concern in recent months. While this may not be the most favorable development for individuals seeking to maximize their earnings through job changes, the overall stability of the labor market remains relatively strong. Corporate profit margins have held steady, and most economists are not overly concerned about the current state of the job market.
The Cooling Labor Market and its Implications for Inflation
Stabilizing Labor Market Dynamics
As the Great Resignation phenomenon fades, the labor market is experiencing a notable shift in dynamics. Recent data indicates that workers are increasingly choosing to stay in their current roles rather than seeking new opportunities elsewhere. This trend is evident in the reduced number of people quitting their jobs and the overall decrease in gross hiring. Consequently, the significant pay advantages once enjoyed by job switchers have diminished, with the gap between their year-over-year pay gains and those of job stayers narrowing considerably.
Improved Productivity and Skill Acquisition
The longer tenures of employees in their current positions have led to the formation of more cohesive and efficient teams. As workers spend more time in their roles, they develop a deeper understanding of their responsibilities and acquire new skills, resulting in increased productivity and expertise. This stability not only benefits the employees themselves but also the organizations they work for, as businesses can allocate fewer resources to recruitment and onboarding processes, allowing them to focus on other critical aspects of their operations.
Potential Implications for Inflation and Wage Growth
The decline in job hopping and the associated pay bumps may have a moderating effect on inflation. As wage growth slows, it could help alleviate some of the inflationary pressures that have been a concern in recent months. While this may not be the most favorable development for individuals seeking to maximize their earnings through job changes, it is generally seen as a positive sign for the overall economy. Despite these shifts, the labor market remains relatively strong, with corporate profit margins holding steady and most economists expressing limited concern about the current state of the job market.
Economists’ Perspectives on the Future of the Labor Market
Shifting Dynamics in the Labor Market
As the Great Resignation phenomenon loses steam, economists are observing a notable change in the labor market dynamics. Recent data suggests that workers are increasingly opting to remain in their current positions rather than seeking new opportunities elsewhere. This trend is reflected in the reduced number of people quitting their jobs and the overall decrease in gross hiring. Consequently, the significant pay advantages once enjoyed by job switchers have diminished, with the gap between their year-over-year pay gains and those of job stayers narrowing considerably.
Enhanced Productivity and Skill Development
The longer tenures of employees in their current roles have led to the formation of more cohesive and efficient teams. As workers spend more time in their positions, they gain a deeper understanding of their responsibilities and acquire new skills, resulting in increased productivity and expertise. This stability not only benefits the employees themselves but also the organizations they work for, as businesses can allocate fewer resources to recruitment and onboarding processes, allowing them to focus on other critical aspects of their operations.
Potential Impact on Inflation and Wage Growth
The decline in job hopping and the associated pay bumps may have a moderating effect on inflation. As wage growth slows, it could help alleviate some of the inflationary pressures that have been a concern in recent months. While this may not be the most favorable development for individuals seeking to maximize their earnings through job changes, it is generally seen as a positive sign for the overall economy. Despite these shifts, the labor market remains relatively strong, with corporate profit margins holding steady and most economists expressing limited concern about the current state of the job market.
