The United States job market has witnessed a remarkable evolution, transforming from a period marked by unprecedented employee turnover to one defined by remarkable stability. This phenomenon is often referred to as the shift from the “Great Resignation”—which peaked between 2021 and 2022—to the current scene dubbed the “Great Stay.” In this new era, hiring rates, employee quits, and layoffs have all experienced a significant decline, indicating a trend where individuals are choosing to remain in their positions longer than before. Julia Pollak, chief economist at ZipRecruiter, identifies this shift as an indication that the most chaotic aspects of the pandemic-affected labor market are sliding into the past.
During the initial phases of reopening post-Covid, there was a surge of hiring as companies strived to reclaim their footing in a now-changed market. Job vacancies soared, unemployment rates fell to historic lows, and workers found themselves amid a highly competitive labor environment where wages saw an unprecedented increase. More than 50 million employees chose to leave their jobs in 2022 alone, breaking records from the previous year. This wave of departures was largely fueled by a demand for better opportunities, reflecting a belief among workers that the grass was greener in new roles. However, as time progressed, this trend began to reverse.
Economists from job platform Indeed note that the rate of employees opting to resign has dipped below pre-pandemic levels after experiencing a jaw-dropping peak in 2022. The hiring environment has also shifted dramatically, recorded at its lowest rate since 2013, aside from the turbulent early pandemic stage. Layoffs remain comparatively low despite the ongoing economic recalibrations. This scenario reinforces a growing tendency among employers to retain their workforce even amid uncertain economic conditions. As noted by Allison Shrivastava from Indeed, such retention patterns underscore employees’ current inclination to stick with their jobs, which in turn creates a sense of stability.
The reluctance to lay off employees stems from an intense fear of ’employer scarring.’ Pollak indicates that past challenges in hiring and retaining talent create a genuine aversion among employers to repeat those straining experiences. This hesitance shapes current employer-employee dynamics, contributing to fewer workers making the leap to new opportunities.
Interestingly, while job openings have diminished, the accompanying decrease in turnover reflects a lack of worker confidence in securing alternative employment. The U.S. Federal Reserve’s inflation-taming measures, initiated through interest rate hikes from early 2022 to mid-2023, have also played a crucial role in this evolving labor landscape. Increased borrowing costs prompted businesses to pause their expansion efforts, which directly affected hiring practices and further dampened employee mobility.
Despite the apparent job security for those currently employed, individuals seeking new roles face a challenging environment. Pollak emphasizes that fresh college graduates and frustrated workers may encounter formidable obstacles in their job searches. Under these circumstances, a multi-faceted approach to job hunting is essential. Prospective job seekers are encouraged to broaden their search parameters and explore opportunities for skill enhancement to increase their employability in this competitive market.
The ongoing transition into the “Great Stay” reflects a stabilizing labor market; however, it remains influenced by the tumultuous experiences of the recent past. As companies and employees navigate this new environment, it remains crucial to prioritize adaptability and resilience. While those currently employed enjoy unprecedented stability and security, potential employees should be prepared to adjust their expectations and strategies to thrive in a job market that has irrevocably changed.
The “Great Stay” represents more than just a shuffling of employees; it highlights a new socio-economic landscape. By understanding these dynamics and adopting proactive strategies, workers and employers alike can navigate this evolving job market effectively, ensuring mutual growth and stability in an age defined by uncertainty.