A “Now Hiring” signal hangs within the window of a hair salon within the Greater Boston city of Medford, Massachusetts, August 12, 2025.
Brian Snyder | Reuters
Wage growth is doing one thing odd today.
Typically, wages grow at a faster clip each year for staff who change jobs, in comparison with those that stay in their current role.
That is smart: Workers usually go away a job once they discover one thing higher for them, which regularly features a larger wage, in keeping with labor economists.
But in 2025, the roles have reversed as staff, confronted with a souring job market, shift from job-hopping to “job hugging” — that’s, clinging to their present roles.
Annual wage growth for so-called “job stayers” has eclipsed that of “job switchers” for the previous six months, since February, in keeping with data tracked by the Federal Reserve Bank of Atlanta.
The margins aren’t enormous: For instance, in July, job stayers noticed wages develop at a 4.1% annual tempo, versus 4% for staff who switched jobs, in keeping with the Atlanta Fed information.
However, that sustained reversal factors to an underlying weakness in the labor market, economists stated.
Since the late Nineteen Nineties, a chronic reversal in wage growth developments for job “switchers” versus “stayers” has solely occurred in durations across the Great Recession and the dot-com bust within the early 2000s, the Atlanta Fed information reveals.
The final time a drawn-out reversal occurred was in and instantly following the Great Recession, throughout an 18-month interval from February 2009 to July 2010, in keeping with the info.
“We only tend to see it around other times when the labor market has been weak,” stated Erica Groshen, a senior economics advisor on the Cornell University School of Industrial and Labor Relations and former commissioner of the U.S. Bureau of Labor Statistics from 2013 to 2017.
The Atlanta Fed computes a three-month shifting common of median hourly wages utilizing information from the Current Population Survey, reported by the U.S. Census Bureau and Bureau of Labor Statistics.
That stated, mixture information on the labor market suggests it is nonetheless in “pretty strong” form, Groshen stated.
‘Workers have misplaced some bargaining energy’
But it has regularly cooled from a torrid tempo lately.
Job openings had ballooned to historic highs in 2021 and 2022 because the U.S. financial system awoke from its pandemic-era hibernation. Ample alternative led staff to quit their jobs in report numbers for brand spanking new employment, commanding massive payouts from corporations keen to draw expertise.
Now, amid excessive rates of interest and financial uncertainty, job openings have fallen and employers are hiring at their slowest tempo in additional than a decade.
“Maybe employers are not feeling that they need to offer their new workers higher wages in order to get them, and workers have lost some bargaining power in the labor market,” Groshen stated.
The quits price — the speed at which staff are voluntarily leaving their jobs — has additionally declined sharply. It has hovered round 2% for the reason that begin of the yr, in keeping with information from the U.S. Labor Department’s Job Openings and Labor Turnover Survey. Outside of the preliminary days of the Covid-19 pandemic, levels haven’t been that consistently low since early 2016.
This is the first motive why wage growth for job stayers has eclipsed that for job switchers, stated Allison Shrivastava, an economist on the job website Indeed.
A depressed quits price suggests staff aren’t voluntarily leaving their jobs to search out higher ones as a result of they do not have faith in doing so, Shrivastava stated.
More from Personal Finance:
Trump immigration policy may be shrinking labor force
Working longer to afford retirement is a risky plan
‘Job hugging’ has replaced job-hopping
In this “frozen” labor market, during which there’s not lots of voluntary job-hopping, staff who’re pressured to depart a job involuntarily usually tend to settle for a brand new job that does not pay as properly, she stated.
“They’re more in a situation of taking what they can get,” Shrivastava stated.
Long-term unemployment is rising
This is particularly true for staff who’re thought of long-term unemployed, economists stated. Long-term unemployment is a interval of joblessness lasting at the very least six months.
About 25% of all jobless people in July had been long-term unemployed, the highest share since February 2022, in keeping with U.S. Bureau of Labor Statistics information.
Such individuals are usually not eligible for unemployment advantages, economists stated.
“They may be willing to take a job for a lower wage than they were at the beginning,” Groshen stated.
Overall, the easiest way for staff to enhance their wages in mixture continues to be most likely by switching jobs, Shrivastava.
“But the opportunity to switch your job right now is not really there,” she stated.
There are ways for jobseekers to set themselves up for success in a troublesome hiring market, profession consultants stated.
Among them: Find inventive networking alternatives — conferences, seminars, lectures or e book signings the place different attendees are more likely to be in your occupation. Jobseekers can look internally for a brand new job placement, which can be simpler than looking for out one thing exterior. They can concentrate on upskilling and reskilling to land a brand new job extra simply when the market rebounds.