Workers rode a wave of good vibes during the pandemic, when, amid skyrocketing prices for everything from eggs to gasoline, they were able to get stunningly high raises for jumping around jobs. During the “Great Resignation,” workers job-hopped their way to higher pay at a rate not seen in decades—with 50.5 million people, or about one-third of the workforce, leaving their jobs in 2022. That churn led to historic raises for the rank-and-file (not to mention a record number of Americans starting businesses).
But the Great Reshuffle has now morphed into the Great Stay as the job market settles into a lull. And a spate of new government data released this week shows just how quiet that lull has become.
The quits rate, which measures workers voluntarily leaving their job (usually for a new, higher-paying one) fell to a three-year low in December, with just 2.2% of all workers quitting that month, in line with the pre-pandemic average of about 2.3%. The following month, companies including Amazon, Alphabet, Salesforce, Unity, and even UPS announced tens of thousands of job cuts.
And pay rose at its slowest pace since early 2021, according to the Employment Cost Index, released by the Labor Department on Wednesday.
In the third quarter of last year, private-sector wages rose by just 0.9%. The all-compensation costs index, which also incorporates the cost of benefits, rose just 0.87%.
White-collar workers fared worse in terms of raises than their blue-collar counterparts, noted Andrew Hunter, deputy chief U.S. economist at Capital Economics.
“The industry data show that [dropoff] was driven by particularly sharp slowdowns in retail, finance, professional services, and education and health, offsetting slightly stronger wage growth in manufacturing and trade, transport, and utilities,” Hunter said in a research note.
He predicted wages would slow even further as the year continues, given how many fewer workers are quitting.
Overall, while 2023 was a strong year for workers compared to the pre-pandemic norm, it pales in comparison with the supercharged job market that preceded it, with record job-hopping, pay rising at the highest rate in 40 years, and the unemployment rate hitting a 50-year low.
“Workers evaluating the 2023 labor market on its own terms can find much to celebrate, but those comparing their labor market fortunes to those of the prior two years likely experienced disappointment,” Julia Pollak, chief economist at ZipRecruiter, told Fortune in an email.
Over the course of the year, Pollak said, “workers felt the ground moving under their feet” as the hiring rate declined precipitously between January and December. Indeed, 2023 “saw the second-largest hiring rate decline over the course of the year, after 2008,” Pollak said. Likewise, over that same time period, the year saw a drop in job openings that was the third-worst on record, behind 2008 and 2001—both years when the economy was in recession.