Job-hopping isn't paying what it used to.
During the heyday of the "great resignation," workers could expect to see a 20% pay bump from changing jobs.
Now, as the job market cools and companies become more cautious with hiring, the big signing bonuses and high salaries new hires once enjoyed are dwindling.
Data from payroll provider Gusto shows that wages for new hires are 5% lower than they were for new recruits in the same roles in July 2022, with tech and administrative roles seeing some of the sharpest declines. Nearly half of the 2,000 employers surveyed by ZipRecruiter in July said they had reduced pay for recent job openings.
As businesses cut new hires' salaries, however, jobseekers' wage expectations have hit record highs, according to a Federal Reserve Bank of New York survey released Monday.
Job seekers' average "reservation wage," or the lowest pay they'd be willing to take to switch jobs, climbed to $78,645 in July 2023, an 8% increase from just a year ago and the highest number in a data series that began in 2014, CNBC reports.
Matt Dalrymple has applied for over 50 sales jobs in New Jersey and New York since his previous employer, Yellow, filed for bankruptcy and laid off its workforce earlier this month.
The posted salaries for the roles he's interested in, the 24-year-old says, have fallen around $10,000 since he last browsed job listings six months ago (he's targeting account manager roles that pay at least $65,000-$80,000). Dalrymple has also noticed that hiring managers seem "a lot less eager" to mention, or discuss, pay during job interviews than in 2021, the last time he was on the job hunt.
"I almost expected this to happen though," he says. "Everyone's worried about inflation, and whether or not we're going to end up in a recession ... I've just accepted that I might have less negotiating power than I did two years ago."
To be fair, persistent inflation isn't helping the disconnect between companies and new hires: Bosses see inflation as a reason to cut costs, while workers see the higher cost of living as a reason to ask for more money.
What's driving the employee-employer disconnect
But inflation isn't the only culprit here.
The job market is still recovering from the whiplash of the past three years, including the lasting effects of remote work and the "great resignation," says Liz Wilke, principal economist at Gusto.
"This drop in pay for new hires is almost a normalization from the last two years when new hire pay was bonkers," Wilke adds.
Offering hiring bonuses and higher salaries might have been a smart short-term move to attract talent, but it isn't sustainable in the long term, says Julia Pollak, chief economist at ZipRecruiter.
Much of the employee-employer disconnect around compensation, she adds, has been fueled by a difference in expectations. "Job seekers adjusted their salary expectations based on the 'great resignation,' while employers are trying to return to the way things were before the pandemic," Pollak explains.
How recession fears affect new hires' pay
There's also less competition for talent, says Ron Seifert, a senior client partner at staffing firm Korn Ferry, so companies can be "less aggressive" in their initial offers.
Pollak agrees, adding that the mass layoffs that rocked the tech sector last year have helped drive down salaries for new hires. "The dogfight for computer scientists and software engineers has more or less ended," she says. "Companies no longer face pressure to match the offers coming from big tech firms."
Plus, companies aren't hiring quite as many people as they were 9, or 12 months ago, Seifert points out. "A lot of leaders still feel threatened by a possible recession or downturn and are pumping the brakes on spending, and for many, hiring is their largest expenditure," he says.
In June, job openings fell 738,000 to 9.58 million, according to the U.S. Bureau of Labor Statistics.
The fact that job seekers' wage expectations are at record highs could indicate that they're nervous about a downturn too. Says Wilke: "If you're going to start at a new company, and potentially be the first one out in the event of a recession, you're going to want to be compensated more in order to take that risk."
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