The landscape of the U.S. labor market has undergone significant shifts in recent years, primarily catalyzed by disruptions caused by the COVID-19 pandemic. What began as a period marked by unprecedented employee turnover, where millions of Americans opted to leave their jobs in search of better opportunities, has now transformed into a more stable environment characterized by relative job security and low turnover rates. This transition, termed the “Great Resignation” of 2021 and 2022, has evolved into what some economists are calling the “Great Stay.”
In the wake of the pandemic, many workers took their chance to pivot their careers. The surge in job quitting reached extraordinary heights, with more than 50 million individuals choosing to depart from their positions in 2022 alone. This phenomenon reflected a broader trend of workers re-evaluating their lives and careers, motivated by the desire for more fulfilling roles, better salaries, and enhanced work-life balance. The intense scramble for talent resulted in wages rising at an unprecedented rate as companies vied to attract potential employees. During this period, it seemed that career mobility was at an all-time high, illustrating a willingness among the workforce to take risks for perceived better opportunities.
Contrasting sharply with this earlier trend, the current job market is marked by a stabilizing climate, where quitting rates have decreased significantly, pushing the narrative toward the Great Stay. Many employees are opting for stability, and the rate of job openings has noticeably declined. Economic uncertainties and interest rate hikes instigated by the Federal Reserve have led to a more cautious approach from both employers and employees alike. The once chaotic and dynamic job landscape has shifted to one where individuals are increasingly reluctant to change jobs. As firms grapple with workforce retention post-pandemic, there’s an observable hesitance to lay off employees, stemming from recent painful experiences in hiring.
One of the primary drivers of this Great Stay phenomenon is what experts refer to as “employer scarring.” Organizations that once struggled to attract and maintain talent are now resistant to parting ways with existing employees, fearing a repeat of the turbulence faced during the pandemic. This is creating a paradox where individuals seeking new opportunities may find themselves stuck in their current roles, unable to leverage job vacancies that have dwindled due to business caution.
Furthermore, the economic context surrounding high inflation and the resultant interest rate hikes have led companies to curtail expansion plans, effectively leading to a stagnation in hiring. Employers are navigating a tightening market, where the once vibrant landscape of openings has become subdued.
For those actively seeking employment—including recent graduates and professionals dissatisfied with their current positions—the challenge has become multifaceted. Job seekers are faced with a more competitive arena, where available positions are fewer and worker confidence in terms of quitting their jobs has waned. Economists suggest that those in search of new roles may need to broaden their horizons by acquiring new skills or altering their job search strategies to improve their chances of finding satisfactory employment.
The essential takeaway from this evolving job market is the dichotomy between job security for existing employees and the limited opportunities for prospective job seekers. As the dust settles from the turmoil of the pandemic-era labor market, we are witnessing a stabilization that offers unprecedented employment security for some, while inadvertently constricting avenues for others.
The Great Stay signifies a new normal in employment, where many workers are choosing stability over the excitement of potential job changes. While the current environment provides significant security for those already employed, it imposes challenges for those looking to break into this conservative job market. The lessons learned from recent history will continue to shape both employer and employee behaviors in the coming years as we adapt to this complex new reality in the U.S. job market.