The Job Jitters: Why Americans Are Hitting Pause on Career Moves

In recent years, the U.S. job market witnessed an unprecedented upheaval known as the “Great Resignation.” Tens of millions of Americans swapped their jobs in pursuit of higher wages, better working conditions, and more flexible hours. This mass exodus created a seismic shift in the labor market, catching the attention of economists and analysts alike. However, the frenetic pace of job hopping appears to be slowing down as of late, according to a new report by the Bank of America Institute.

As of May, the percentage of workers moving from job to job has dipped to an average of 3%, a noticeable decline from the nearly 3.75% observed in mid-2022. This change suggests that the labor market is cooling down after its feverish state over the past couple of years. During the peak of the Great Resignation, job switchers were enjoying some hefty pay raises, with median increases soaring above 20%. This period was a bonanza for workers, particularly those who seized the opportunity to jump ship for better paychecks.

But what goes up must come down, and it seems the days of sky-high pay raises might be waning. The report indicates that the median pay increase for job hoppers has shrunk to about 10% as of May 2024. While still advantageous, it’s a far cry from the lucrative 20% hikes seen during the Great Resignation. The tightening of job hopping trends can be attributed to a few factors, including higher interest rates and persistent inflation, which are beginning to put the squeeze on the labor market.

Interestingly, the data also reveal a split in the job market dynamics based on income levels. Lower-income Americans continue to receive the most significant median pay raises when they switch jobs. In contrast, middle- and higher-income workers are seeing their bargaining power diminish. This disparity indicates that while opportunities for lucrative job changes still exist, they are increasingly concentrated at the lower end of the wage spectrum.

Small businesses are also feeling the pinch, grappling with ballooning rents and other operational challenges. As the Federal Reserve holds interest rates at a 23-year high, projecting only a single rate cut this year, the economic landscape is becoming more challenging for both employers and employees. With job hopping losing its luster and pay raises dwindling, the balance of power seems to be shifting back towards employers, particularly in the middle and upper tiers of the job market.

All these factors culminate in a labor market that is beginning to show signs of strain. With fewer people switching jobs and the financial perks of doing so diminishing, the once-booming job market might be entering a period of stabilization. For now, it appears that the era of the Great Resignation is drawing to a close, leaving both workers and employers to navigate a more subdued and complex employment landscape.