Job quits have decreased by nearly one-third since early 2022
Pay disparity between job switchers and stayers collapsed from 8.4% to 1.9%
Labor market has shifted from worker shortage to having more workers than openings
The 'low-hire, low-fire' environment may be reducing labor market dynamism and productivity growth
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US workers are experiencing a significant shift in the labor market as the Great Resignation momentum fades, with job 'quits' decreasing by nearly one-third since early 2022 and the pay disparity between job switchers and stayers collapsing from 8.4 percentage points to just 1.9 percentage points in January, according to data from ADP and the Bureau of Labor Statistics. This reversal comes after the pandemic-era phenomenon saw a record 4.5 million workers leave their jobs monthly at its peak in March 2022, as companies struggled to fill unprecedented vacancies created by the pandemic's disruption. The changing landscape reflects a pendulum swing from a worker-favoring market to one with more available talent than openings, fundamentally altering the calculus for employees considering career moves.
The transformation in labor market dynamics is characterized by remarkable stability with minimal hiring and firing, as described by Nela Richardson, chief economist at ADP, who noted this represents an outgrowth of the pandemic's initial 'all hands on deck' emergency response. While the unemployment rate remains low at 4.3% and initial jobless claims hover around historical norms at 219,000, the market has lost much of its previous dynamism. The reduction in job openings from pandemic highs has coincided with a 31% increase in job searches in January compared to December, indicating growing competition for fewer positions.
Industry-specific variations reveal the complexity of this new labor reality, with the leisure and hospitality sector actually showing better pay gains for job stayers (2.5% advantage), while construction maintains a 6.6 percentage point advantage for switchers due to ongoing labor supply challenges. Despite these disparities, the overall incentive structure has shifted dramatically, with even job switchers experiencing modest 6.4% annual pay growth in January—still above stayers' 4.5% but a far cry from the premium environment of 2022. Economists worry that this stability, while appearing positive on the surface, may actually hinder productivity growth by preventing the reallocation of talent to where it's most valuable, potentially creating longer-term economic consequences.
The Great Resignation, also known as the Big Quit and the Great Reshuffle, was a mainly American economic trend in which employees voluntarily resigned from their jobs en masse, beginning in early 2021 during the COVID-19 pandemic. Among the most cited reasons for resigning included wage stagnation ...
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With the upheaval of the Covid pandemic came opportunity, as a shift in the labor market gave workers unprecedented opportunities for mobility and a chance to climb the pay scale. The Great Resignation , as it came to be known, saw record amounts of employees quit, leaving for better opportunities as companies couldn't hire workers fast enough to fill the vacancies that the pandemic helped create. A record 4.5 million left their jobs for greener pastures in March 2022. But that is changing. The level of "quits" as measured by the Bureau of Labor Statistics has contracted by nearly one-third since hitting its peak in early 2022, a period during which job openings have nearly halved. One metric helps further tell the story: During the same period, the disparity between average annual pay increases for those staying in their jobs against those leaving has all but collapsed, going from a peak of 8.4 percentage points in April 2022 to 1.9 percentage points in January, the lowest level since payrolls processing firm ADP began tracking the data in November 2020. Call it the Big Stay , or just another outgrowth of the low-hire, low-fire labor market, but it's a trend that has significance for workers. A pendulum swing "It's a very stable labor market. There's very little hiring, very little firing," said Nela Richardson, chief economist at ADP. "It's an outgrowth of the pandemic from where it was all hands on deck." A lack of labor supply and a pernicious skills gap was the story when the economy was trying to recover from the massive drawdown it had seen during the early Covid days. Workers and employers were adjusting to the new world of hybrid work, and companies were hungry for new recruits. As the Great Resignation peaked, there were more than two job openings per each worker the BLS classified as unemployed. That pendulum has swung back, however, and there are now more available workers than openings. watch now VIDEO 4:12 04:12 The labor market is 'essentially going s...
