Employees who switched companies used to earn roughly 10 to 20 percent more than those who stayed with one company.
Not anymore.
The median pay increase for workers switching jobs sank substantially to 4.8 percent last month from a high of 7.7 percent nearly two years ago, according to newly released data from the Federal Reserve Bank of Atlanta. Job stayer pay increases fell from 5.7 percent to 4.6. percent last month from two years ago. Last month, their pay increases were nearly the same.
Even in the technology sector, job switchers are not receiving big increases.
The Wall Street Journal reports that senior and midlevel leaders in tech face the most pronounced pay drops of between $10,000 and $40,000 a year, says Michael Butts, chief executive of Burtch Works, a staffing company that tracks compensation for executives and white-collar professionals around the U.S. Even in artificial intelligence, managers overseeing machine-learning teams have seen compensation shrink by $10,000 to $20,000 a year as companies focus on hiring practitioners over leaders.
As layoffs continue across industries and with nearly half of Wall Street economists forecasting higher probabilities of a US recession, fewer people are quitting their jobs. Americans quit 39.6 million jobs in 2024, down 11 percent from the year before and down 22 percent from a recent peak in 2022, according to Labor Department data published in February. The share of employees who quit their jobs each month has fallen below the COVID-19 level, and some economists expect more decreases ahead.
While hiring was surprisingly high in March, not many expect the trend to continue. According to the , nonfarm payrolls in March increased by 228,000 for the month, up from the revised 117,000 in February and better than the Dow Jones estimate of 140,000. However, the unemployment rate rose one-tenth of a point to 4.2 percent. Healthcare was the leading growth area, consistent with prior months. The industry added 54,000 jobs, almost exactly in line with its 12-month average. Hiring demand also remained high in dining and entertainment. As well, hiring increased in social assistance, transportation and warehousing, and retail.
Please note that the hiring data does not reflect many of the reported layoffs among federal government employees. Those are yet to come. The survey of households, which is used to determine the unemployment rate, was closely in line with the establishment payroll count, as it showed a gain of 201,000 workers. Moreover, full-time workers increased by 459,000, while part-timers fell by 44,000.
I believe the March hiring uptick will be an anomaly for office workers because the chances of recession are rising. The white-collar recession is real. What should employers do?
Employers need to focus on their talent management strategies and should:
- Provide clear and open communications to employees about the company’s performance and maintain morale and a focus on customer needs.
- Be transparent about pay practices and continue to alleviate pay compression where it exists. Learn more here.
- Involve employees with AI transformation and train them in new technologies.
- Invest in job skills and agility training among employees. You will see great returns on investment.
- Continue to offer flexible work arrangements that are popular with employees and increase productivity by as much as 20 percent.
- Be positive.
As the probability of recession rises, it is critical to focus on your talent management strategies to keep your best talent and prepare your workforce for the skills needed during this turbulent economy.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board the Us Department of Energy on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com