Wage growth now favors job stayers over job switchers

Wage growth trends in the labor market have taken an unexpected turn in 2025. Traditionally, workers who switch jobs experience higher wage growth compared to those who stay in their current roles. However, the tables have turned this year as job stayers are seeing higher wage growth than job switchers. This shift is indicative of a weakening job market, with workers opting to “hug” their current jobs rather than hop to new opportunities.

According to data from the Federal Reserve Bank of Atlanta, job stayers have seen their wages grow at a faster pace than job switchers for the past six months. While the difference in wage growth rates is not significant, it highlights underlying weaknesses in the labor market. This reversal in wage growth trends for job switchers versus job stayers is reminiscent of periods during the Great Recession and the dot-com bust in the early 2000s.

Economists attribute this shift to a cooling job market, marked by a decline in job openings and a slowdown in hiring. With high interest rates and economic uncertainty, employers are less inclined to offer higher wages to attract new talent. As a result, workers have lost bargaining power in the labor market, leading to a decrease in the quits rate.

The quits rate, which measures the rate at which workers voluntarily leave their jobs, has declined sharply in 2025. This lack of job mobility means that workers are less likely to find better-paying opportunities elsewhere. Consequently, job stayers are seeing higher wage growth as they hold onto their current positions.

Long-term unemployment is also on the rise, with a significant portion of jobless individuals being classified as long-term unemployed. These individuals, no longer eligible for unemployment benefits, may be more willing to accept lower wages just to secure a job. While switching jobs remains a viable way to improve wages, the current job market presents challenges for job seekers.

In a frozen labor market with limited job-hopping opportunities, job seekers are advised to focus on networking, upskilling, and seeking internal job placements to enhance their chances of landing a new job. By adapting to the evolving job market dynamics, workers can position themselves for success in a tough hiring environment.