The tippy top of the labor pool isn't expressing good feelings about the US labor market, and if they aren't feeling it, things are not too good.
The share of US workers that can seamlessly make a direct transition from one employer to another has slid near a four-year low, according to the latest data from the Federal Reserve Bank of Philadelphia, pointing to a weakening labor market.
These workers typically are the most in-demand employees in the economy since they are in high demand and often poached by competing firms for more money. The Philly Fed says such switchers are a key yardstick for measuring the labor market’s dynamism. The weakened competition for talent is seen as an indication of worsening health in the labor market.
For the past two-and-a-half years the share of employer-to-employer job changers has been falling and is now around the lows hit in 2021 when the economy was reeling from the pandemic. The wage premium for job-switchers over those who stay put has been declining, and it’s now disappeared, according to the wage trackers published by the Atlanta Fed. That rarely happens.
The new raise? Keeping the job you already have.
Neat coverage of Levels.fyi's data in today's The Wall Street Journal article, looking over 2024 and highlighting how the market is largely bifurcated today by AI and non-AI companies and roles.
Over the last few years, many tech employees have found themselves unexpectedly locked in. Not by contracts, but by the realities of their compensation structures.
In 2021-2022, new hire packages at top tech firms were highly competitive, especially for senior roles. But with the market cooling and fewer high-paying opportunities available, many employees are staying put. Not necessarily because they want to, but because switching jobs often means taking a pay cut.
This dynamic is creating an uneven talent market:
➡️ Senior employees with strong historical comp packages are holding tight, even without raises, unless they’re laid off.
➡️ Those in lower-paying roles are the ones driving today’s job mobility, but often at lower overall comp levels than before.
Median pay for software engineers, product designers, and technical program managers declined 1-2% in the second half of 2024, according to our data at Levels.fyi. Meanwhile, AI roles remain in high demand, commanding premium salaries.
This “golden handcuff” effect may be one of the biggest hidden drivers of today’s job market slowdown. Those currently in their roles are very okay with not getting a pay bump as long as they keep their job and can finish out their grant. But here’s the real question: What happens when more employees fully vest their grants? Will we see a wave of movement in late 2025 and beyond?
Well. We can file this under "nothing we didn't already know" - but the job market is really throwing us for a loop.
Uncertainty around the economy, and specific hand-wringing in industries like biotechnology and science-oriented fields is taking its toll on companies and on job seekers. We're all trying to figure out what the future may hold and getting nervous in the process.
If wages are cooling and attrition is dropping, you'll be holding on to more of your team members for a longer period. Engaging and motivating your team shifts from "I know I should think about it but I just don't have time for that right now and besides it will take care of itself and by the way, I'm pretty busy doing business things..." to a strategic imperative that you've got to nail in order to drive your business forward.
So what should we do about it, huh?
💡 Connect your team to meaningful work. Employees who are intrinsically motivated by the mission of the company and what you're looking to achieve will go farther, faster!
💡 Connect accomplishments at the individual level to the success of the company. Seeing your own personal impact on that mission is intensely gratifying.
💡 Create an environment of collaboration and support. When team members feel the support of their manager *and* their peers - that's where the magic happens.
✨ And remember ✨ - that means you can't compromise on performance or behaviors. Top-notch team members demand top-notch colleagues.
In the recent past, white-collar workers could expect a pay bump simply by landing a job at a different company. But as hiring budgets stall and fewer people quit, those days are largely over, The Wall Street Journal reports. The salary difference between workers who stayed and those who switched jobs “has collapsed.” Meanwhile, the percentage of U.S. workers who jumped directly from one employer to another has slumped to a four-year low, another indication the labor market is softening.
I stand here naked, covered only by a giant sign—on it, my salary is scrawled in black Sharpie.
Last night the Wall Street Journal published my personal salary history in an article about today's dire job-seeking climate. While it's not the reason I would have hoped to be featured in the WSJ and it's uncomfortable to be exposed financially in this way, it was important for me to do so.
The world feels upside down right now. The harder and longer you work in a field the more valuable you are to businesses, right? Wrong. At least not today.
This article teases the myriad of challenges job seekers are currently facing. From low-balled salaries to companies being more selective than ever, with mass layoffs allowing them to sift through thousands—yes thousands—of candidates, for their perfect unicorn. And with word of this dire job climate spreading, fewer people are quitting, leaving the pool of viable job openings more shallow than ever.
In the spirit of REAL transparency, my current salary is $0 with unemployment barely covering my massive Cobra payment + groceries. Watching your savings tick down like the sands of an hourglass all while hitting an all-time low in confidence is humbling, to say the least. But I'm glad I could at least contribute to the conversation in hopes that it changes.
How have you been impacted by today's job market? What other trends are you seeing? How are you cutting through the noise as a candidate?