Another motivation to hold into a stable employment is that it pays to stay.
Employees who land a new job typically receive larger pay increases than those who stay in their current employment. However, according to data from the Federal Reserve Bank of Atlanta, in February, the median salary growth for job stayers was 4.4%, which was higher than the 4.2% gain for job switchers.
The shift is another indication of a deteriorating job market, as indicated by a three-month moving average. Because of worries about inflation, slowing economic growth, and interest rates, firms have been cutting positions for the past year.Many white-collar workers are still employed as a result of layoffs at large IT and financial companies. According to Peter Cappelli, a professor of management at The Wharton School of the University of Pennsylvania, workers are now forced to accept smaller pay increases due to an excess of job seekers.
Cappelli stated, “That sounds like a big slackening of the job market.”
It is a significant reversal from the “Great Resignation” a few years earlier, when employees quit at historically high rates to demand better compensation and benefits from their employers. According to Atlanta Fed data, workers who were rehired experienced a staggering 8.5% increase in pay at a high in July 2022, while those who remained with their business had a 5.9% increase.
However, the difference has already closed, with job-stayers experiencing superior salary growth in August for the first time since 2018. Additionally, according to data from the Federal Reserve Bank of Philadelphia, the percentage of US workers switching employers is currently at a level that has not been seen in almost four years. Indeed, a variety of economic measures, such as the quantity of job opportunities, a robust rate of job growth, and low unemployment, show labor market resiliency.
Nonetheless, the stock market’s volatility and recession fears have been exacerbated by President Donald Trump’s trade policies and agency layoffs. In the aftermath of recessions, job-stayers typically see higher income increases than job-switchers. This covers the years following the 2008 financial crisis and the dot-com recession of 2001.
