A “Now Hiring” signal hangs within the window of a hair salon within the Higher Boston city of Medford, Massachusetts, August 12, 2025.
Brian Snyder | Reuters
Wage progress is doing one thing odd as of late.
Sometimes, wages develop at a sooner clip every year for staff who change jobs, in comparison with those that keep of their present function.
That is sensible: Employees typically depart a job once they discover one thing higher for them, which regularly features a greater wage, in line with labor economists.
However 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 progress for so-called “job stayers” has eclipsed that of “job switchers” for the previous six months, since February, in line with data tracked by the Federal Reserve Financial institution 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 line with the Atlanta Fed knowledge.
Nevertheless, that sustained reversal factors to an underlying weak point within the labor market, economists stated.
For the reason that late Nineteen Nineties, a chronic reversal in wage progress traits for job “switchers” versus “stayers” has solely occurred in intervals across the Nice Recession and the dot-com bust within the early 2000s, the Atlanta Fed knowledge exhibits.
The final time a drawn-out reversal occurred was in and instantly following the Nice Recession, throughout an 18-month interval from February 2009 to July 2010, in line with the info.
“We solely are likely to see it round different occasions when the labor market has been weak,” stated Erica Groshen, a senior economics advisor on the Cornell College College 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 knowledge from the Current Population Survey, reported by the U.S. Census Bureau and Bureau of Labor Statistics.
That stated, combination knowledge on the labor market suggests it is nonetheless in “fairly sturdy” form, Groshen stated.
‘Employees have misplaced some bargaining energy’
Nevertheless it has steadily cooled from a torrid tempo in recent times.
Job openings had ballooned to historic highs in 2021 and 2022 because the U.S. economic system awoke from its pandemic-era hibernation. Ample alternative led staff to quit their jobs in file numbers for brand spanking new employment, commanding huge payouts from firms 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.
“Possibly employers will not be feeling that they should supply their new staff greater wages with the intention to get them, and staff have misplaced some bargaining energy within the labor market,” Groshen stated.
The quits charge — the speed at which staff are voluntarily leaving their jobs — has additionally declined sharply. It has hovered round 2% because the begin of the 12 months, in line with knowledge from the U.S. Labor Division’s Job Openings and Labor Turnover Survey. Outdoors of the preliminary days of the Covid-19 pandemic, levels haven’t been that consistently low since early 2016.
That is the first cause why wage progress for job stayers has eclipsed that for job switchers, stated Allison Shrivastava, an economist on the job website Certainly.
A depressed quits charge suggests staff aren’t voluntarily leaving their jobs to search out higher ones as a result of they do not trust in doing so, Shrivastava stated.
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‘Job hugging’ has changed job-hopping
On this “frozen” labor market, wherein there’s not a whole lot of voluntary job-hopping, staff who’re compelled to go away a job involuntarily usually tend to settle for a brand new job that does not pay as effectively, she stated.
“They’re extra in a scenario of taking what they’ll get,” Shrivastava stated.
Lengthy-term unemployment is rising
That is very true for staff who’re thought of long-term unemployed, economists stated. Lengthy-term unemployment is a interval of joblessness lasting no less than six months.
About 25% of all jobless people in July have been long-term unemployed, the highest share since February 2022, in line with U.S. Bureau of Labor Statistics knowledge.
Such persons are typically now not eligible for unemployment advantages, economists stated.
“They might be keen to take a job for a decrease wage than they have been at the start,” Groshen stated.
General, one of the simplest ways for staff to enhance their wages in combination remains to be most likely by switching jobs, Shrivastava.
“However the alternative to change your job proper now shouldn’t be actually there,” she stated.
There are methods for jobseekers to set themselves up for achievement in a tricky hiring market, profession consultants stated.
Amongst them: Discover inventive networking alternatives — conferences, seminars, lectures or guide signings the place different attendees are prone 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 will deal with upskilling and reskilling to land a brand new job extra simply when the market rebounds.
