After two years of record high resignations, the “big resignation” may be gone.
In 2022, more than 50 million US workers will leave their jobs, the highest number of quits since the government began tracking in 2000, according to federal data.
Abundant job opportunities, labor shortages and significant wage increases for job-changing workers all fueled this historic wave of stagnation – today, however, these dynamics are slowing, and the great resignation seems like “a thing of the past,” said Nela Richardson, ADP’s chief economist.
Fewer people quit their jobs so far in 2023: In March, the number of quits fell to about 3.9 million, the lowest level since May 2021, according to the latest Labor Department . Job Openings and Job Transfer survey.
As Richardson sees it, “the ‘big drop’ of the past year could be mitigated by the ‘big stay.'”
But mass resignations, a trend that has spawned a million colloquialisms and widespread panic among bosses, are not entirely driven by the economy.
“The big resignation, at its core, was a shock to people,” Richardson explained. “All the challenges of the pandemic have led us to reevaluate the purpose of work in our lives… the financial pressure of staying in a job you hate because you need the money.”
Today, much of the social support migrant workers relied on is “gone,” he added. “The labor market is no longer favorable to job switchers.”
Less pay for job switchers
Job hopping doesn’t pay like it used to.
In April, job seekers saw a 13.2% year-over-year wage increase, up from 14.2% the previous month, ADP reports. This is the slowest rate of growth in the wages of job-shifters seen since November 2021.
To be fair, workers who stayed in their jobs also saw their wages fall, but at a much smaller rate: The wages of those who stayed in their jobs fell 0.2% between March and April 2023, compared to when where they were a year ago, according to ADP. Richardson expects wage gains among those who switch jobs to decline at a higher rate than those who stay in the workforce in the coming months.
Those who have changed jobs, he added, are “less likely” to see a big increase in their wages than nine months ago. In some cases, “you could have done better and made more money if you stayed at your current job,” he added.
This is especially true for workers looking to move into entertainment and hospitality jobs, Richardson points out, because this industry is used to high turnover and employers feel less pressured to pay a premium for new employees.
In all industries, however, “companies aren’t holding onto workers as tightly as they used to,” Richardson said. “There are no more big, romantic moves in the labor market.”
Although the wage increase for full-time workers is outpacing inflationRichardson expects salary gains “start to stall” on coming months along with the Federal Reserve’s continued efforts to lower inflation.
Labor market ‘starting to rebalance’
The demand for talent and supply of candidates at the end of the night.
While there are still more job openings, these numbers are nowhere near the historically high levels that have prompted massive resignations. In March, there were nearly 9.5 million job openings, down 20% from a year ago, according to the federal data.
At the same time, the number of people returning to the job market has increased: In the depths of the pandemic, the labor force participation rate fell below 80%, but rose again to 83.3% this April, highest rate in 25 years, which has boosted hiring.
Now that companies have more or less recovered the millions of jobs lost to the pandemic, workers have lost some leverage, Richardson said.
“If you’re wondering what the next six months will look like, we can expect to see a labor market starting to rebalance,” he explained. Offering just to get people in the door, like remote work, is easy.”
What the ‘big stay’ means for Gen Z, millennials in the workforce
Gen Zers and millennials will see the biggest salary gains from not quitting, even if they more likely than other generations who will resign this year.
Nearly 72% of Gen Zers and 66% of millennials are considering a career change in the next 12 months, compared to 55% of Gen Xers and 30% of baby boomers, a recent LinkedIn survey found.
Gen Zers, in particular, are exploring their options after starting their careers in disrupted hybrid or isolated environments at the start of the pandemic, Karin Kimbrough, chief economist at LinkedIn, said. CNBC Do It in January.
However, many young people are switching jobs will regret their decision to quit. Nearly 90% of Gen Zers who leave their jobs during the big break regret quitting, and as a result, their mental health declines, according to a recent Paychex survey of 825 workers.
Gen Z and millennials who have held their jobs for more than 12 months have seen the biggest pay increases compared to other generations of workers, likely because they “have the lowest starting salaries,” Richardson pointed out.
The wages of workers between the ages of 16 and 34 who have kept their jobs are 10-15% higher, on average, than a year ago, ADP reports.
No matter what generation you’re in, Richardson stresses how important it is to consider all factors when deciding whether to switch jobs, including benefits and flexibility.
“If a higher salary is your No. 1 priority, you have to be more selective,” Richardson said. “But if you’re willing to weigh the other benefits of a job, including flexibility, you may have more options available to you.”
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