\n<\/p>\n
A \u201cNow Hiring\u201d sign hangs in the window of a hair salon in the Greater Boston town of Medford, Massachusetts, August 12, 2025.<\/p>\n
Brian Snyder | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Wage growth is doing something odd these days.<\/p>\n
Typically, wages grow at a faster clip each year<\/a> for workers who switch jobs, compared to those who stay in their current role<\/a>.<\/p>\n That makes sense: Workers generally leave a job when they find something better for them, which often includes a higher salary, according to labor economists.<\/p>\n But in 2025, the roles have reversed as workers, faced with a souring job market, shift from job-hopping to \u201cjob hugging<\/a>\u201d \u2014 that is, clinging to their current roles.<\/p>\n Annual wage growth for so-called \u201cjob stayers\u201d has eclipsed that of \u201cjob switchers\u201d for the past six months, since February, according to data<\/a> tracked by the Federal Reserve Bank of Atlanta.<\/p>\n<\/div>\n The margins aren\u2019t huge: For example, in July, job stayers saw wages grow at a 4.1% annual pace, versus 4% for workers who switched jobs, according to the Atlanta Fed data.<\/p>\n However, that sustained reversal points to an underlying weakness in the labor market<\/a>, economists said.<\/p>\n Since the late 1990s, a prolonged reversal in wage growth trends for job \u201cswitchers\u201d versus \u201cstayers\u201d has only happened in periods around the Great Recession and the dot-com bust in the early 2000s, the Atlanta Fed data shows.<\/p>\n The last time a drawn-out reversal occurred was in and immediately following the Great Recession, during an 18-month period from February 2009 to July 2010, according to the data.<\/p>\n \u201cWe only tend to see it around other times when the labor market has been weak,\u201d said Erica Groshen, a senior economics advisor at the Cornell University School of Industrial and Labor Relations and former commissioner of the U.S. Bureau of Labor Statistics from 2013 to 2017.<\/p>\n The Atlanta Fed computes a three-month moving average of median hourly wages using data from the Current Population Survey<\/a>, reported by the U.S. Census Bureau and Bureau of Labor Statistics.<\/p>\n That said, aggregate data on the labor market suggests it\u2019s still in \u201cpretty strong\u201d shape, Groshen said.<\/p>\n<\/div>\n But it has gradually cooled from a torrid pace in recent years.<\/p>\n Job openings had ballooned<\/a> to historic highs in 2021 and 2022 as the U.S. economy awoke from its pandemic-era hibernation. Ample opportunity led workers to quit their jobs<\/a> in record numbers for new employment, commanding big payouts from companies eager to attract talent.<\/p>\n Now, amid high interest rates and economic uncertainty, job openings have fallen and employers are hiring<\/a> at their slowest pace in more than a decade.<\/p>\n<\/div>\n \u201cMaybe employers are not feeling that they need to offer their new workers higher wages in order to get them, and workers have lost some bargaining power in the labor market,\u201d Groshen said.<\/p>\n The quits rate \u2014 the rate at which workers are voluntarily leaving their jobs \u2014 has also declined sharply. It has hovered around 2% since the start of the year, according to data from the U.S. Labor Department\u2019s Job Openings and Labor Turnover Survey. Outside of the initial days of the Covid-19 pandemic,\u00a0levels haven\u2019t been that consistently low<\/a>\u00a0since early 2016.<\/p>\n This is the primary reason why wage growth for job stayers has eclipsed that for job switchers, said Allison Shrivastava, an economist at the job site Indeed.<\/p>\n A depressed quits rate suggests workers aren\u2019t voluntarily leaving their jobs to find better ones because they don\u2019t have confidence in doing so, Shrivastava said.<\/p>\n More from Personal Finance:<\/strong> In this \u201cfrozen\u201d labor market, in which there\u2019s not a lot of voluntary job-hopping, workers who are forced to leave a job involuntarily are more likely to accept a new job that doesn\u2019t pay as well, she said.<\/p>\n \u201cThey\u2019re more in a situation of taking what they can get,\u201d Shrivastava said.<\/p>\n<\/div>\n This is especially true for workers who are considered long-term unemployed, economists said. Long-term unemployment is a period of joblessness lasting at least six months.<\/p>\n About 25% of all jobless individuals in July were long-term unemployed, the highest share<\/a> since February 2022, according to U.S. Bureau of Labor Statistics data.<\/p>\n<\/div>\n Such people are generally no longer eligible for unemployment benefits, economists said.<\/p>\n \u201cThey may be willing to take a job for a lower wage than they were at the beginning,\u201d Groshen said.<\/p>\n Overall, the best way for workers to improve their wages in aggregate is still probably by switching jobs, Shrivastava.<\/p>\n \u201cBut the opportunity to switch your job right now is not really there,\u201d she said.<\/p>\n There are ways for jobseekers to set themselves up for success<\/a> in a tough hiring market, career experts said.<\/p>\n Among them: Find creative networking opportunities \u2014 conferences, seminars, lectures or book signings where other attendees are likely to be in your profession. Jobseekers can look internally for a new job placement, which may be easier than seeking out something external. They can focus on upskilling and reskilling to land a new job more easily when the market rebounds.<\/p>\n<\/div>\n<\/div>\n\n\u2018Workers have lost some bargaining power\u2019<\/h2>\n
Trump immigration policy may be shrinking labor force<\/a>
Working longer to afford retirement is a risky plan<\/a>
\u2018Job hugging\u2019 has replaced job-hopping<\/a><\/p>\nLong-term unemployment is increasing<\/h2>\n
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