Companies are back in control, at least for now.
Workers, in general, have lost their power after being spoiled during the Great Resignation. Career growth opportunities, flexible work-from-home benefits, and wage growth have cooled.
It’s getting harder to negotiate a new job and move up the career ladder at your current gig. Exclusive data from Gusto, a payroll and benefits platform for small and medium-sized businesses, showed that the rate of workers receiving a promotion, meaning a title bump and a raise of at least 5%, peaked at 14.5% around mid-2022 and has now fallen to just over 10%.
Economic uncertainty is likely a reason. Aaron Terrazas, an economist with Gusto, said companies are pausing big decisions, and more employees are staying put.
“It’s clear that during that period of intense competition for talent, companies were using promotions as another incentive to retain their employees, prevent them from looking elsewhere,” Terrazas said.
Compensation and job mobility have worsened
Don’t expect high wage growth in the near future. Indeed data shows the year-over-year change in pay advertised in US job postings on the platform has cooled from the Great Resignation high of 9.5% in November 2021 to 3% this past April.
What it boils down to: It’s gotten harder to find a new job, so people are willing to work for less. A survey from the Federal Reserve Bank of New York showed the average lowest wage people said they would accept for a new job dropped from about $82,000 this past November to $74,000 in March.
And once at a job, they’re not advancing as quickly as in recent years. Gusto data showed promotion rates at small to midsize businesses declined across the board from May 2022 to this past May. Technology took the biggest hit, sliding from 17.4% to 10%. Terrazas said companies could be stepping back from their “aggressive talent retention strategies” they had a few years ago.
“There’s less of an urgent need for companies to lure their employees to stay in positions through promotions,” Terrazas said.
There’s less bargaining power, especially in white collar and retail
Cory Stahle, an economist at the Indeed Hiring Lab, said people looking for white-collar roles, especially in software development, have less bargaining power than in healthcare, where workers are more in demand.
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He added that the power has shifted to employers in retail, where Indeed data shows postings have cooled to below pre-pandemic demand. Tariff uncertainty could be a reason. Though many of President Donald Trump’s plans have been paused or walked back, Stahle said “the damage” could have already been done.
“With the on again, off again tariffs and a lot of the other uncertainty in the economy, businesses are a little more hesitant because they’re saying, ‘We’re not sure what spending is going to look like going forward,'” Stahle said.
People hoping to get a work-from-home gig will have a harder time finding one than in the past few years, when more companies allowed this during the pandemic. Indeed data shows the share of job postings mentioning hybrid or remote has cooled down to 7.5% at the end of May from 10% in 2022. While some companies are requiring people to work a few days a week in person, Amazon and JPMorgan are among the companies that have called on workers to be in the office every day.
All hope isn’t lost for workers hoping to negotiate for more. Because of how business cycles work, Stahle thinks bargaining power will shift back to workers eventually — and then employers will have the upper hand again someday, too.
“It really is this tug of war, back and forth, that is driven by broader economic forces rather than some moral force,” Stahle said.
Stahle doesn’t think people have to wait. He said if you have the skills an employer needs, you can try to negotiate what you want.
“If you have an opportunity to negotiate, you should always be trying to negotiate, ” Stahle said. “Always be trying to make sure that you are getting upfront the pay and the compensation and the benefits that match your skills and your experience.”
Have you struggled to land a promotion or find a new job in the current economy? Reach out to this reporter at [email protected].
