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Lackluster raises and mass layoffs could lead to a new 'quiet quitting' wave this year

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A souring economic picture is driving fewer people to quit, but they may end up quiet quitting instead.

Voluntary turnover dropped to 25% in 2022 from 36% the year prior, possibly because people are worried about a potential recession and layoffs, according to Payscale's 2023 Compensation Best Practices Report. The report surveyed nearly 5,000 compensation professionals, HR leaders and business executives from October to December 2022.

A quitting slowdown is welcome news for employers who've scrambled to recruit and retain talent during the Covid economic recovery, though it's still considerably higher than the desirable 10% turnover rate, Payscale experts said in a press call with reporters last week. (Payscale did not ask about quitting rates prior to Covid.)

Still, having to replace 1 in 4 workers is a considerable task for managers to find solutions to keep people from walking out the door. Most employers think pay is the biggest reason causing people to quit, especially in an inflationary environment, followed by limited opportunities to advance, according to the Payscale report.

Most employers are hoping a little more money will entice workers to stay. A majority, 56%, say they're planning raises of at least 3% this year, up from 53% last year and 36% in 2021, according to Payscale. But the days of sky-high raises are over — increases are expected to come in around 4% to 5%, whereas most 2022 raises were above the 5% range, says Lexi Clarke, Payscale's vice president of people.

And those planned raises will do little to stand up against inflation, which sits at 6.4% as of January.

Quiet quitting could get worse: 'It's not going anywhere'

Small raises might not be enough to keep people from quiet quitting, the polarizing buzzword from 2022 that describes the act of no longer going above and beyond at work.

Most employers, 55%, aren't concerned about quiet quitting, according to Payscale, with managers saying the term is "mislabeled work-life balance and that as long as employees do the job they were hired for and deliver the requirements outlined by their manager, it is not 'quitting' in any sense of the word," per the report.

Still, 29% of leaders say employees who don't go above and beyond will not succeed and risk being fired if they're discovered to be underperforming.

Employers might want to take the phenomenon more seriously, especially in a continuously challenging labor market, if they can't award robust raises and promotions, or if they're preparing for layoffs, Clarke says.

"I don't think quiet quitting is going away in 2023, especially if we're in a recessionary environment that causes more layoffs," she said in a press briefing with reporters. "When workers are let go, it increases the burnout or potential burden on folks who are still there."

This can lead to burnout and breed resentment, "especially if we think about an environment without pay raises or promotions," she adds.

Employers should think of quiet quitting as a reflection of engagement, and in turn productivity, which can falter when rewards don't materialize for employees in challenging times, she says.

"It ultimately is an engagement issue as we think about what employees are really looking for and setting boundaries for themselves," she says. "It's not going anywhere."

Bosses hope new benefits will outweigh lackluster pay

Beyond pay, or in the absence of big raises, companies are trying to stay on the cutting edge of benefits to keep and attract workers. Businesses are investing more in increasing their mental health and wellness programs, paid sabbaticals and extended family leave.

They're also trying to push new boundaries around workplace flexibility: The share of companies offering a 4-day workweek benefit reached the 10% threshold for the first time last year, according to the report.

"Employees are looking for flexibility," says Payscale pay equity analyst Ruth Thomas, "potentially as they continue to experience a decline in real wage growth [and] seeing themselves working longer hours, they're seeking some level of return."

Check out:

From 'relief' to 'not too devastated': Why some laid-off workers aren't rushing to find new jobs

'It's a huge concern': Senior-level women are calling it quits after decades climbing the career ladder

More companies say they're giving bigger raises this year—here's how much to expect

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