One way to think about the labor market is as a game of musical chairs. Through 2021 and 2022, as the “Great Resignation” soundtrack played, workers hopped from job to job, garnering ever-higher salaries. Employers struggled to attract and hold onto talent amid the restless frenzy.
Now, the music has stopped, with implications for individuals thinking about when to make their next career move and for leaders in how they manage their teams.
We’re in a relatively static period, with hiring slowed, raises moderating, and resignations again at more normal levels. Uncertainty around the impact of artificial intelligence and the US election are surely adding to workers’ and companies’ paralysis. The economy remains relatively strong, but the labor market is much less dynamic than it has been in recent years.
Perhaps the most telling signal is the dramatic decline in attrition, which measures the number of people leaving jobs, whether voluntarily or not, relative to overall headcount. The US attrition rate is at its lowest level since mid-2008, according to data from workforce-intelligence company Revelio Labs.
Source: Revelio Labs
(Note: These data skew toward larger companies, which currently have especially low attrition rates. The rate is also down at smaller companies, but less dramatically.)
What this shows is that a lot of US workers are parked in their jobs. They’re cautious, while many employers are careful about hiring and less aggressive about trying to poach workers away. “There is a striking lack of dynamism in the US economy at the moment, almost like a deer-in-the-headlight moment,” Lisa K. Simon, Revelio’s chief economist, told us recently.
Job satisfaction and employee engagement remain relatively low, and more than 40% of workers say they plan to look for a new job in the next 12 months, according to a recent Greenhouse survey. But anecdotally, we know that companies are drawing out hiring processes and in some cases posting ghost jobs they probably won’t fill. For many people looking for work, their time on the job marketing is lengthening.
The implications of this relative stasis are underappreciated. Some important takeaways for leaders and individuals to consider:
Managers need to get more creative about recognizing, rewarding, and engaging workers. This moment requires management tactics that many people are out of practice with. To be sure, when the Great Resignation music was playing, it was a headache to have your team members leave for jobs elsewhere. But with the music stopped and few people budging out of their seats, openings to promote high-performing and high-potential workers into can be scarce. Promotions and raises are two familiar levers for rewarding performance, and they’re harder at most places for managers to pull on now than a few years ago.
To motivate and retain team members, especially those contributing the most to the team’s results, managers need to invest time and resources in other tactics. One good one is to make sure that key team members have access to meaningful skills-building opportunities, especially ones tied to interesting, high-impact projects. Another is for managers to invest their own time. Research consistently shows that weekly one-on-one check-in meetings with a manager are one of the biggest drivers of engagement and performance. A simple shoutout or thank you to an employee in public or private contexts also has similar benefits.
On the flip side, low attrition means that managers might need to spend more time with poor performers who might previously have left on their own, to get them up to speed or accelerate their departures. Consulting firms like McKinsey, for example, are reportedly cutting some workers and offering others nine-months pay while they look for a different job, according to the Financial Times, though that isn’t necessarily performance driven.
Individuals need to think more proactively about their careers. Fewer workers can now passively rely on recruiters flooding them with job offers in order to make their next move or boost their salary. And many people might be reluctant to dive into a new career or company or start a business right now, given the climate of economic, political, and technological uncertainty.
It’s a good time for workers to discuss with their manager what the prospects are internally for continued career advancement and challenges. That way they have laid the groundwork when an opening might arise to take on a new role or plum project. Those opportunities could include temporary secondments to other parts of the company or filling a stretch role as parental-leave coverage.
The other area for workers to focus is on building up skills. That’s something few companies are good at doing for their employees, even while many are making detailed analyses of the specific skills required for jobs a core part of their “skills-based” talent strategies. So people would do well—through formal training, projects that stretch them, or outside activities such as volunteering—to create their own plans for building out the skills that will bolster their careers.
Certainly, one big unknown for both employers and workers is how artificial intelligence will impact jobs and the skills required for them. Already, AI has been directly linked to thousands of US layoffs. In a moment like this, AI fluency—through personal experimentation with AI tools like ChatGPT, if nothing else—is arguably vital for people to progress in their careers. Some 71% of leaders say they’d rather hire a less experienced candidate with AI skills than a more experienced candidate without them, according to a new survey from Microsoft and LinkedIn.
Like any other chapter in the economy, the current situation is not permanent. Revelio’s Simon, for one, believes that attrition “will level off somewhere in between the current low levels and the crazy high attrition we saw in 2021/2022.”
That’s likely true. But many people and organizations haven’t stepped back to take stock since the Great Resignation music stopped playing. It’s a good moment to do so. Managers, with fewer worries about team members leaving, can focus on nurturing the talent they have. For workers, the era of frequent job hopping has passed—now is the time for them to concentrate on developing skills that will pave the way for future career advancement.