It’s hard to square mass layoffs at giants like Amazon, Google, Meta, and others flooding the headlines with labor market data that indicates jobs are still plentiful and workers continue to have bargaining power.
While tens of thousands of workers across tech, finance, and media have abruptly lost their jobs in recent months, the national unemployment and layoff rates remain historically low, and there are millions more job openings than there are people to fill them.
And consider this another data point tilting in the favor of workers: 64% of employers say they’re boosting their annual raises this year, a 23% increase from 2022, according to a Salary.com survey of HR professionals representing over 1,000 employers in the fall of 2022.
The biggest reasons for the generous raises are to temper turnover and help employees combat inflation, says Garry Straker, Salary.com’s vice president of compensation consulting.
Some 40% of HR leaders say it’s more difficult to hire now than last year, and nearly a quarter say constant turnover is impacting their ability to hit business goals.
Meanwhile, with inflation eating into earnings, employees have a higher expectation of their employers to pay competitively to keep up with rising costs, Straker says.
Employers are stopping short of offering inflation-matching raises, though. Companies are planning for an average raise of 4.1% for workers, Straker says. Inflation is cooling from mid-2022 highs but was still around 6.5% as of December.
Bosses also have to be strategic in offering up more to those most likely to quit. That means some workers might see bigger boosts.
Lower-wage workers are most likely to quit for another job that pays a little bit more money, for example, so they might see a 4.5% raise as an incentive to stick around, whereas other workers might see something closer to 3.5%, Straker says.
Industries seeing the most amount of turnover include health care, software and networking, hospitality and leisure, and manufacturing, where upwards of 1 in 5 workers are quitting in each sector, according to Salary.com data. Workers are staying longer at their jobs in aerospace and defense, as well as business services.
It’s worth noting that the survey was fielded in September and October of 2022, just before companies like Meta, Amazon, Salesforce, and HP began announcing mass layoffs. It’s possible some organizations have adjusted their planned raises in the months since.
But with the tech sector making up just 4% of the labor force, “layoffs do not seem to be ubiquitous,” Straker says. “There are certainly industry sectors where it seems to be more prevalent and more of a ‘follow the leader’ type of thinking.”
Layoffs at big corporations may be getting the spotlight, Straker adds, but his work with middle-market and smaller clients all indicate many are still struggling to hire talent.
He gives an example of one conversation he had with a client in the Northwestern part of the U.S.: The company was hiring a key role in HR and made four different offers to highly qualified candidates, but none of them accepted because they got a higher offer somewhere else.
“That’s just one example,” Straker says, “but the labor market is uneven. Certainly, layoffs are grabbing headlines, but there are a lot of employers still recruiting aggressively in the market.”