The benefits of switching jobs may not be as lucrative as they once were
The COVID-19 pandemic has brought about unprecedented changes in the labor landscape, with work-from-home and hybrid arrangements becoming the new norm. This shift has not only prompted people to explore alternative ways of working but has also led to a surge in job resignations, giving rise to terms like “The Great Resignation” and “The Big Quit.” According to the U.S. Bureau of Labor Statistics, between June 2021 and December 2022, over 4 million Americans quit their jobs each month.
However, recent data indicates a decrease in the number of workers opting to leave their current positions. In March 2023, the quit rate stood at 2.5%, down from 2.9% the previous year, as reported by the Bureau of Labor Statistics. Additionally, the ADP Research Institute highlights a decline in monthly job postings. While there were still 9.6 million job openings in March of this year, the figure represents a 20% decrease compared to the over 12 million postings in March 2020.
Nela Richardson, the chief economist at ADP, explains that the “great resignation” phenomenon was fueled by abundant job opportunities, labor shortages, and significant pay increases for those who switched jobs. However, the dynamics that contributed to this trend are now diminishing, leading to a decline in the phenomenon itself.
Shireen El-Maissi, the Director of People and Talent at Blueboard, acknowledges a growing desire for stability among employees. She has observed individuals who have held three jobs within the past two years expressing a need for a sense of belonging and permanence. Layoffs, particularly in the tech industry, have further emphasized the importance of staying put. In the current economic climate, workers are more inclined to seek growth opportunities within their existing organizations, considering the associated risks.
The pandemic has also affected employees on a personal level, and although managers may not fully comprehend every struggle, it is crucial for employers to show understanding and empathy for the challenges workers have faced. Establishing an open and caring workplace culture has become essential. According to ADP, 68% of workers feel comfortable discussing their physical health, and 64% feel the same about their mental health. The majority of employees also express satisfaction with the support they receive from their managers (64%) and co-workers (71%).
When it comes to financial considerations, the benefits of switching jobs may not be as lucrative as they once were. ADP Pay Insights data reveals that the year-over-year pay increases gained from job switches peaked in June 2022 at 16.4%. However, by April 2023, pay gains for workers who switched jobs had decreased to 13.2%. Nonetheless, employees still maintain expectations for fair compensation in line with the rising cost of living. A significant portion (62%) reported receiving a raise in the past year, with the average increase amounting to 6.4%. Additionally, 44% of workers feel they are underpaid, and 83% anticipate a raise in 2023.
Interestingly, while financial stability remains important, Shireen El-Maissi notes that money is no longer the sole determining factor for employees. Individuals seek to earn income in a manner that aligns with their values and the time they invest in their work. Moreover, a sense of connectedness within the workplace has become crucial. Whether it’s a connection to the company, a specific project, or co-workers, employees are more inclined to remain with an organization if they feel this sense of belonging and connection.
As the labor landscape continues to evolve, workers are making deliberate choices that prioritize stability, meaningful connections, and personal fulfillment within their professional lives. This shift highlights the need for employers to adapt and create an environment that supports and nurtures these evolving expectations