By George Waggott, founder, and Roberto Fonseca-Velazquez, summer law student,
George Waggott Law
Introduction
A recent article by Bloomberg examines the transition from the Great Resignation to what is now being termed as the Big Stay. The Great Resignation, characterized by a mass exodus of employees from their jobs in pursuit of better opportunities, work-life balance, and flexibility, has given way to a new trend where workers are opting to stay put in their current roles.
Economic and Market Context
Several economic factors have contributed to this shift towards The Big Stay. The initial waves of the COVID-19 pandemic saw millions of workers leaving their jobs, driven by what they claimed were dissatisfaction, burnout, and the search for more meaningful work. However, as the pandemic's economic impacts have lingered and evolved, so too has the labour market. Rising interest rates, inflation, and economic uncertainty have made the job market less favorable for switching roles.
Impact of Higher Interest Rates
The decision by many countries to maintain consistently high interest rates to combat inflation has led to more limited economic activity and overall concerns about financial prospects. These rate hikes increase borrowing costs for both consumers and businesses, leading to reduced spending and investment. Consequently, companies are adopting more conservative financial strategies, including hiring freezes and layoffs, particularly in sectors sensitive to interest rates like technology and finance. These developments all impact individuals and their outlook on work and their related career plans.
Job Security Over Higher Pay
As a result of these economic policies, employees are prioritizing job security over higher salaries. The risk of moving to a new job only to face potential layoffs or a volatile work environment is a significant deterrent. Many workers report that they are finding that the stability of their current positions outweighs the potential benefits of a pay raise, especially when factoring in the uncertainties of a new job.
Shift in Workforce Dynamics
The labour market dynamics have shifted in favour of employers. During The Great Resignation, employees had the upper hand, leveraging the high demand for labour to secure better pay and conditions. In contrast, the current economic climate has shifted the balance of power back to employers. Companies are now less desperate to fill positions and can be more selective, offering fewer incentives for new hires. In other words, what had been a sellers (employee) market has now become a buyers (employer) market.
Wage Growth and Job Openings
Data from various labour market analyses, including the ADP Research Institute, shows a slowdown in wage growth for job switchers. The wage increases that job switchers could command have diminished, aligning with the decrease in job openings. This trend suggests that employees who might have considered switching jobs for better pay are now more inclined to stay where they are.
Impact on Different Sectors
Interestingly, the impact of this trend is not uniform across all sectors. Blue collar workers in industries like hospitality, construction, and retail, who were heavily impacted during the pandemic, now are likely to face fewer layoffs compared to white collar professionals in sectors such as technology and finance. The term "richcession" has been coined to describe the current wave of layoffs hitting higher-paid white collar workers more than their blue collar counterparts.
Conclusion
The transition from The Great Resignation to The Big Stay marks a significant shift in the North American labour market. Economic uncertainty, coupled with conservative financial strategies from companies and high interest rates, has led to a more risk-averse workforce. Employees are now prioritizing job security over the potential benefits of changing jobs. As the economy continues to stabilize and evolve, this trend may persist, shaping the labour market dynamics and organizational strategies for the foreseeable future.
For more information about George Waggott Law, please see: www.georgewaggott.com, or contact: george@georgewaggott.com
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