The U.S. job market has experienced a significant evolution over the past few years. What once was a landscape marked by high employee turnover has transformed into a more stable environment, with fewer individuals changing jobs. This phenomenon, often referred to as the “great resignation” during its peak in 2021 and 2022, has now shifted into what some economists label the “great stay.” In this new reality, rates of hiring, voluntary quits, and layoffs have notably decreased, suggesting that both employers and employees are opting for stability over change.
Economists like Julia Pollak from ZipRecruiter have noted that the tumultuous labor market experienced during the pandemic is gradually receding from the public’s consciousness. As the economy has reopened post-pandemic, businesses eagerly resumed hiring, which led to a surge in job openings, a substantial drop in unemployment rates, and wage growth at rates not seen in decades. However, this hiring frenzy did not sustain itself indefinitely; instead, the market has reached a plateau which now reflects lower levels of turnover.
In 2022 alone, over 50 million workers voluntarily left their positions, indicating a remarkable shift in employee confidence as they sought better opportunities. However, as the labor market has cooled, the quit rate has fallen below pre-pandemic levels, indicating that many employees are now hesitant to leave their current roles. Allison Shrivastava from Indeed points out that hiring has slowed considerably, reaching the lowest levels seen since 2013, not counting the initial disruptions caused by the pandemic.
This transformation highlights a complicated dynamic where fewer employees are leaving their jobs against a backdrop of consistently low layoffs. As Shrivastava indicates, this reluctance to move reflects employers’ desire to retain their workforce, shaped by their previous challenges in hiring and maintaining talent. This scenario creates a paradox where while job security is rising, the opportunities for those seeking new employment appear to be dwindling.
A significant factor contributing to this “great stay” is the Federal Reserve’s response to soaring inflation rates. Between early 2022 and mid-2023, the Fed undertook a series of interest rate hikes aimed at stabilizing the economy. This tightening approach has had a ripple effect, making borrowing costs higher and prompting businesses to scale back on expansion initiatives and new hiring protocols. Even with recent interest rate cuts, which began in September, the Fed has indicated a cautious approach towards further rate reductions.
Given these economic dynamics, labor experts like Pollak caution that while the situation suggests stability for current employees, those seeking employment—especially recent graduates and individuals dissatisfied with their current roles—might be facing heightened challenges in finding suitable positions.
The implications of the great stay on job seekers are significant. For those in the workforce, the current environment may offer an unprecedented level of job security. On the flip side, the implications for new entrants to the job market or those looking to pivot in their careers could be discouraging. Pollak advises aspiring candidates to broaden their job search parameters and consider expanding their skill sets to increase their competitiveness in a less fluid job market.
In closing, the evolution from the great resignation to the great stay encapsulates a profound change in the U.S. labor market. As stability takes center stage, the focus shifts from sheer opportunities to strategic career planning, urging individuals to adapt to this new norm where job permanence holds a new significance. Workers must navigate this landscape carefully, balancing their aspirations against the realities of a stabilizing but competitive job market. Understanding these dynamics is crucial for both employers and employees as they adapt to this transformed employment scene.