Salary Trends: A Narrowing Gap

Recent findings from a wage growth survey by the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of Atlanta have revealed that the gap in salary increases between employees who remain in their positions and those who switch jobs has diminished to its smallest margin in a decade. In January and February, individuals staying in their roles experienced an average salary increase of 4.6%, closely followed by job switchers, who received an average boost of 4.8%.

This trend marks a significant change from January 2023, when those who stayed saw wage hikes of 5.5%, while switchers enjoyed larger increases of 7.7%. This shift in dynamics points to a broader trend in the labor market, where the benefits of changing jobs have lessened over time.

Retention Rates and Worker Sentiment

Amid these changes, data from the U.S. Labor Department indicates a notable decline in job turnover. The quit rate has reached its lowest level in 2024 since 2020, with only 39.6 million Americans leaving their jobs, a steep drop from the over 50 million who quit in 2022.

Many workers are opting to stay put, citing concerns about the difficulty of finding comparable positions. A recent Harris Poll points out that 70% of Americans believe they would struggle to find a job that matches or surpasses their current employment, with a significant portion expressing the sentiment that employers hold more power in today’s job market.

The Current Job Search Landscape

According to interviews, many job seekers are facing challenges with decreased salary offers. For instance, Josh Vogel, a customer success specialist, shared with The Wall Street Journal that after being laid off from a position earning $170,000, he accepted a new job at $120,000 per year. He noted, “No one is paying what they used to. If you don’t like it, there’s 50 people behind you they’re going to call right afterward.”

Hiring Trends in the U.S.

Current statistics from the Bureau of Labor Statistics show a stagnation in hiring rates around 3.3%, a drop from the peak of approximately 4.6% in 2021. This hiring rate is comparable to figures seen in 2013, following the recovery from the Great Recession. The limited hiring landscape intensifies competition among job seekers for the available positions.

Survival of Finance Sector Salaries

Interestingly, one sector not affected by this trend of stagnating salaries is finance. According to the Wall Street Journal, banks with record profits in 2024 are offering competitive salaries for candidates switching roles, despite some institutions like JPMorgan scaling back on employee bonuses.

As one employee remarked regarding their bonuses, “Feels like a slap in the face,” reflecting the discontent among some who expected better compensation.