- In August, US workers quit their jobs at the lowest rate since 2015, barring a drop in April 2020.
- A slowdown in hiring across the U.S. has left job-changers with fewer options.
- It’s making it harder for some workers to get raises and promotions.
In 2021 and 2022, Americans left their jobs at the highest rates since data collection began in 2000. Many were well rewarded with raises, promotions and benefits such as college tuition assistance.
But times have changed – and workers who leave now have to deal with the impact on their wages and career paths. In August, US workers left their jobs at the lowest rate since 2015, excluding a pandemic-related decline in April 2020.
The drop in quit rates isn’t because everyone has recently become satisfied with their jobs and pay.
“The quit rate continues to fall because employment continues to fall,” Kory Kantenga, head of economics, Americas at LinkedIn, told Business Insider.
Americans looking for new roles are facing a much more competitive job market than they were two years ago. Excluding a two-month period related to the pandemic decline in 2020, US businesses are hiring at the lowest rate since 2013. The number of job applicants per open role on LinkedIn has increased to 2.5 from 1.5 in 2022, according to the job platform. The Federal Reserve’s interest rate hikes in recent years — which helped slow inflation — are among the reasons why hiring has slowed. The current employment landscape isn’t just making it harder for disaffected workers to change jobs: it’s blocking one of Americans’ best paths to higher wages and career advancement.
“While quitting smoking often has a negative connotation, it’s an important part of advancing workers’ careers and increasing personal income,” Cory Stahle, an economist at job platform Indeed, told Business Insider.
It is becoming more difficult for some workers to get a raise or promotion
Stahle said wage growth tends to be higher for workers who switch jobs than for those who stay — and that a labor market with fewer departures is likely to lead to “smaller wage increases across the board.”
However, the hiring slowdown has made switching jobs less profitable. The wage growth gap between job switchers and stayers has narrowed since the start of this year.
The decline in smoking has made it even harder for some workers to advance in their careers. When an employee leaves a job, it can create an opening to fill—sometimes through a promotion to another person. In a survey conducted earlier this year by Mercer, a human resources consulting firm, companies reported that they expect to promote about 8% of employees this year — up from 10% in 2023.
Additionally, declining attrition rates have made it easier for some companies to reduce employee benefits, such as telecommuting. For example, workers may not like their employer’s mandate to return to the office, but if they cannot find another job, they may be more likely to tolerate the change.
“Less attrition puts leverage back on employers and reduces pressure to take steps to retain workers through tools like raising wages and offering flexible work arrangements,” Kantenga said, adding, “Many businesses don’t have to compete as much hard for some workers now that retention is higher.”
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Certainly, by some measures, many Americans are satisfied with their jobs and have no desire to leave. According to a survey of nearly 1,700 working adults conducted last November by the Conference Board, 62.7% of respondents were satisfied with their jobs.
Additionally, quitting doesn’t always work for job changers, and many workers are able to find the pay and promotions they seek without changing jobs. For businesses, higher employee retention rates can also increase productivity.
The good news for workers is that the hiring slowdown has not been accompanied by a significant increase in layoffs. While many eager job-changers may feel stuck, they can count on a salary.
Kantenga and Stahle weren’t sure when the dropout rate would increase — and when workers would be better positioned to push for higher wages and promotions. The Fed has started to cut interest rates and some experts are optimistic that the US will avoid a short-term recession. Both of these factors can encourage more businesses to hire.
But if hiring slows further, switching jobs could become even more difficult.
“If we continue to see slow hiring in the face of economic headwinds like tight monetary policy, then resignations will follow and continue to slow as well,” Kantenga said.