Switching jobs was once a surefire way to get a big raise, but federal data suggest that’s no longer the case.
According to the Atlanta Fed’s Wage Growth Tracker, the median pay increase for job switchers fell to 4.2% in February, a sharp decline from 7.3% in early 2023.
Job stayers also saw wage growth slow, though to a lesser extent, declining from 5.8% to 4.4% over the same period.
This marks a stark shift from the labor market immediately post-pandemic, when job switchers consistently outpaced job stayers in pay gains. At their peak in July 2022, job switchers earned as much as 2.6% more than those who stayed put.
The end of the Great Resignation
Labor market analysts attribute the wage downturn to the cooling of the Great Resignation — the post-pandemic wave of record job quits and a labor shortage that drove up wages.
In 2021 alone, about 47 million Americans left their jobs, often securing higher pay elsewhere.
“Job switchers enjoyed a significant wage premium from late 2021 through early 2023 because employers were facing significant labor shortages after the pandemic and needed to offer significant wage increases to lure workers away from their prior positions,” Nancy Vanden Houten, Oxford Economics’ US Lead Economist, told Business Insider.
Now, however, slowing inflation, fewer job offers, and reduced competition for workers have weakened employees’ bargaining power.
“Labor markets are still fairly strong, but nowhere near as tight as in 2022,” Harry Holzer, a nonresident senior fellow in economic studies at Brookings and a public policy professor at Georgetown University, told BI.
“The really large gains in 2022 were occurring during the Great Resignation when the labor market was extremely tight, and workers demanded higher pay,” he said. But now, “quits have gone way down.”
This shift is making many workers reluctant to leave their current jobs.
“Certainly, in DC, there’s this feeling that you’re better off staying put in a way right now with all the layoffs,” Elise Gould, a senior economist at the Economic Policy Institute, told BI.
“There’s some economic insecurity that would be leading to this kind of phenomenon where people might be just staying still more,” she said.
The wage squeeze in tech
Tech professionals, in particular, are feeling the effect of a cooling job market.
Jim Harrington, a principal software engineer at Cart.com who earns over $200,000 a year, told BI that during his 12-month job search, he has seen wages on job listings top out at $180,000.
“It’s not a bad wage, but it is not the levels that we were accustomed to seeing over the last few years,” he said.
According to Levels.fyi data, wages for software engineers, product designers, and technical program managers fell 1-2% in the second half of 2024.
Some professionals have even left the industry altogether.
Ryan Essenburg, who said he worked for 21 years as a Business Development Director at SimulTrans, a translation and localization services company in Mountain View, California, told BI he saw his position eliminated in April 2024.
After what he termed an “existential” job search and lower salary offers, “I decided to put my search on indefinite hold,” he said, adding: “I am coaching tennis now and very happy.”
Others have had to take significant pay cuts.
Raymond Traylor, who was laid off as PairTree’s Chief Technology Officer in December 2023, went from a $180,000 salary to $36,000 as a computer systems analyst at VSorts, a SaaS platform, from December 2023 to March 2023, and has been earning between $3,000 and $5,000 a month as Negotiate Fairly’s CTO and cofounder since March 2024.
“It’s been a multi-year downturn, but hopefully it’s not too much longer, and I hope that we don’t go back to just a boom-and-bust bubble sort of economy,” he told BI, adding he hopes it’s just an “in-between weird time.”
What’s next for wage growth?
While job stayers saw slightly higher pay raises than job switchers in February, their long-term prospects aren’t much better.
Workplace advisory firm Willis Towers Watson projects that US employees who stay in their roles will see an average 3.7% salary increase in 2025, down from 3.8% in 2024 and 4.6% in 2023, though still above the pre-pandemic norm of 3%.
Some economists warn this isn’t just a temporary dip.
“The amount of uncertainty facing businesses today is leading to further reluctance to hire,” Thomas A. Kochanco, co-director of the MIT Institute for Work and Employment Research, told BI.
“If anything, the labor market will get weaker in the months ahead.”
“I hope we are not in for a recession,” he added. “But if that does occur, expect the bargaining power of both job hoppers and incumbents to continue to decline.”
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