Incentives dim for workers to change jobs

Opportunity has arisen with the rise of the Covid pandemic, as the shift in the labor market offers workers unprecedented mobility opportunities and the chance to move up the pay scale.

The “great resignation,” as it is known, caused record numbers of employees to leave their jobs for better opportunities as companies were unable to hire workers fast enough to fill the vacancies created by the pandemic. In March 2022, a record number of 4.5 million people left their jobs for greener pastures.

But this is changing.

“letting go” level It has narrowed by nearly a third since peaking in early 2022, when employment gaps, as measured by the Bureau of Labor Statistics, have been nearly halved.

One metric helps tell the story better: Over the same period, difference between average annual salary Increases for those staying in jobs and those leaving jobs have all but collapsed, rising from a peak of 8.4 percent in April 2022 to 1.9 percent in January. This is the lowest level since payroll processing company ADP began tracking the data in November 2020.

Call it the “big stay” or some other consequence of low hiring and a subdued labor market, but it’s a trend that has significance for workers.

“It’s a very stable labor market. There’s very little hiring, very little layoffs,” said Nela Richardson, ADP’s chief economist. “This is a consequence of the pandemic where everything is out in the open.”

The narrative as the economy struggled to recover from the massive economic contraction it saw in the early days of Covid was one of labor supply shortages and a dire skills gap. Workers and employers were adapting to the new world of hybrid work, and companies were hungry for new hires.

As the “great resignation” reached its peak, there was more than one. Two job postings for every worker the BLS classifies as unemployed. But that pendulum has swung back and there are now more available workers than there are openings.

But layoffs are still low. Only 206,000 views last week initial unemployment claimsThe long-term average is 219,000, roughly in line with historical norms for a healthy labor market. Although hiring has slowed significantly, the unemployment rate is only 4.3%.

“If you were to parachute into this labor market at any time in the United States, you would be mostly happy with what you found,” Richardson said. “The action is in the detailed data.”

For example, wage trends are industry-specific.

According to ADP, wage gains in the high-turnover leisure and hospitality industry are better for those who stay in work; The inequality is 2.5% in favor of those who remain. However, the construction industry, which has struggled to supply labor during the U.S. crackdown on illegal immigration, has a 6.6 percentage point advantage for those who pass.

Incentives remain strong for those who switch, according to ADP data; Annual wage growth averaged 6.4% in January; this rate is well above 4.5% for those who remain. However, the gap is narrowing and may narrow further due to current movements in the labor market.

While searches increased 31% in January compared to December, there was little change in job postings. Indeed Hiring Lab.

“The reality facing job seekers in 2026 is that job openings per unemployed person are decreasing and hiring times are getting longer,” Indeed experts Laura Ullrich and Sneha Puri write. he wrote. “While some sectors continue to see high levels of postings, the macro environment remains in the low-hiring, low-fire recession of 2025.”

Despite the low unemployment rate, Richardson said he is concerned about the “lack of dynamism in the labor market” because most of the hires are in the healthcare sector and job volume is decreasing.

“Low hiring and low firing is actually not a good situation to be in. The loss is significant in terms of productivity growth,” he said. “You want to see the most talented go to places where talent is most rewarded. And if we’re in a truly stable period, that means talent isn’t being repositioned to its best use.”