On August 12, 2025, a “employment now” sign appears in the windows of a hair salon in the town of Boston, Medford, Massachusetts.
Brian Snyder | Reuters
Wage growth has been doing something strange lately.
Wages usually grow faster clips each year for workers switching jobs compared to those who stay in their current roles.
That makes sense. Workers generally quit their jobs when they find something better for them, according to labor economists.
However, in 2025, roles were reversed as workers faced a sour job market and became more and more keen on their current role from job hunting to “embracing the job,” that is, their roles.
According to data tracked by the Federal Reserve Bank of Atlanta, annual wage growth for so-called “employer residents” has driven annual wage growth for “job switchers” over the past six months.
The margin is not that large. For example, in July, workers who switched jobs saw wages increase at a rate of 4.1% per year, according to Atlanta Fed data.
But that sustained reversal indicates a fundamental weakness in the labour market, the economist said.
The long-term reversal of wage growth trends for “switchers” and “stayers” in work since the late 1990s, during the Great Recession and the period around the DOT-COM bust of the early 2000s, data from the Atlanta Fed shows.
Data shows that the last reversal that was depicted shortly after the major recession occurred between 18 months from February 2009 to July 2010.
“We tend to see it only when the labour market is weak,” said Erica Grossen, senior economic advisor at Cornell University School of Industrial and Labor Relations from 2013 to 2017 and former director of the Bureau of Labor Statistics.
The Atlanta Fed uses data from the current census reported by the U.S. Census Bureau and the Bureau of Labor Statistics to calculate the three-month moving average of median hourly wages.
That said, labor market tally data suggests it is still “very strong” form, Groshen said.
“Workers have lost their negotiating power.”
However, in recent years, it has gradually cooled down from a fierce pace.
Job hunting was swelling to historic highs in 2021 and 2022 as the US economy woke up from hibernation during the pandemic era. With ample opportunity, workers have left their jobs in record numbers for new employment, ordering large payments from businesses eager to attract talent.
Currently, amidst high interest rates and economic uncertainty, job openings are declining, and employers are employed at the slowest pace for over a decade.
“Maybe employers don’t feel that they need to provide new workers with higher wages to get them. Workers have lost negotiating power in the labour market,” Groshen said.
QUITS Rates – the rate in which workers voluntarily quit their jobs – are also declining sharply. It has hovered about 2% since the start of the year, according to data from the U.S. Labor Bureau’s job posting and labor sales survey. Outside of the early days of the Covid-19 pandemic, levels have not been that low since early 2016.
This is the main reason why wage growth for employer residents is overturning that for job switchers, said Alison Srivastaba, an economist on the ground.
The downward resignation rate suggests workers are not voluntarily separated to find a better job with confidence, they are not confident in doing so, Srivastava said.
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In this “frozen” labor market, where there are fewer voluntary jobs, workers who are forced to quit their jobs unwillingly are likely to accept new jobs that don’t pay as well, she said.
“They are in a situation where they take what they can get,” Srivastaba said.
Long-term unemployment rates are rising
This is especially true for workers who are considered long-term unemployed, the economist said. Long-term unemployment is a period of unemployment that lasts for at least six months.
About 25% of all unemployed individuals in July were long-term unemployed, the highest share since February 2022, according to data from the U.S. Bureau of Labor Statistics.
Such people are generally out of qualifying for unemployment benefits, the economist said.
“They may be willing to work for a lower wage than they originally did,” Groshen said.
Overall, the best way for workers to improve their gross wages is probably to switch jobs, Srivastaba.
“But now there’s actually no opportunity to switch jobs,” she said.
There are ways job seekers can set themselves up to succeed in the tough job market, career experts said.
Find creative networking opportunities, such as meetings, seminars, lectures, or book signing, where other attendees are likely in your profession. Job seekers can look internally for new employment that may be easier than looking for something outside. They can more easily land new jobs, focusing on upskiing and reskills as the market recovers.
