The Big Stay

The economic climate in 2023 looked starkly different from the economic climate of the years immediately following the pandemic. Whereas 2021 and 2022 were marked by historically low unemployment, strong employment growth and unprecedented demand for labor, 2023 saw high interest rates, an uptick in the unemployment rate, slower jobs growth and a decline in demand for labor as many organizations braced themselves for a potential recession. While the global economy managed to avoid a recession in the official sense of the word, cost savings became the focus of many organizations.

Workers — who benefitted from stronger bargaining power during the post-pandemic recovery — have felt this pressure via layoffs and declining job openings. While the US added jobs steadily throughout 2023, and the unemployment rate hovered around historic lows, workers eager to switch jobs were faced with fewer opportunities. The economy cooled in 2023, prompting a general feeling of economic uncertainty, and workers’ desire for stability has led to a trend coined the “Big Stay.”

From the Great Resignation to the Big Stay

The post-pandemic recovery was marked by an unprecedented level of voluntary separations, with millions of workers quitting their jobs every month. These workers were responding to a historic number of job openings, when at its peak in March 2022, there were two job openings per unemployed worker. This period of time, dubbed the “Great Resignation,” saw many workers switching jobs, primarily for career advancement and higher compensation, but also for increased happiness. This period of time marked a high point in employee bargaining power, and organizations had to offer higher compensation, greater flexibility and other nonwage benefits to attract and retain talent.

The Great Resignation was the result of a hot labor market — unprecedented demand for talent meant more opportunities for workers, and job switchers observed much higher wage increases relative to workers who stayed in their role. In 2022, year-over-year wage increases for job switchers peaked at 16.4%, compared to a peak of 7.8% year-over-year wage growth for job stayers.

At its peak in March 2022, there were two job openings per unemployed worker.

At the end of 2023, there were only 1.3.

However, as the market has cooled, workers have less incentive to job hop. Organizations who hoarded talent in 2021 and 2022 are now being more strategic in their workforce planning. This has translated to fewer opportunities for would-be job switchers, reflected in the sharp decrease in job openings globally. In the US, there were only 1.3 job openings per unemployed worker at the end of 2023, while in Europe, where recession risks are higher, hiring has slowed by 34% in the UK, 32% in France and 22% in Germany. Fewer opportunities and economic uncertainty have made workers more likely to stay in place, leading to the so-called Big Stay.

What Is the Big Stay?

The Big Stay is reflected in quits numbers. During the Great Resignation, quits numbers in the US regularly exceeded 4 million and peaked at 4.5 million in November 2021. However, quits declined to only 3.5 million in November 2023, a number aligned to pre-pandemic trends. The Big Stay is not only prompted by fewer opportunities in the market, but also by fewer incentives to job hop. The average job switcher only saw a 9% pay increase by September 2023, a significant decrease from the double-digit increases that were standard during the Great Resignation. Additionally, as organizations have shifted into cost-savings mode, nonwage benefits are less robust. For many workers, this means finding a new job is riskier than staying in their current role.

The Big Stay has not permeated all sectors of the economy, and white-collar workers have felt the greatest impact of a cooling labor market. While sectors such as IT have been particularly affected by layoffs and declining demand for talent, industries such as manufacturing continue to see large numbers of job postings. In the context of the pandemic, this makes sense — IT and other sectors where workers can perform their work remotely became bloated as organizations fought for and hoarded talent. The drop-off in labor demand is more representative of a course correction to pre-pandemic trends. However, industries most impacted by the pandemic, primarily those where work must be performed in person, continue to see sustained demand for talent and more worker movement. For example, in the leisure and hospitality industry, quit rates remain elevated and are above pre-pandemic levels. In short, a worker’s industry will influence their perception of job opportunities in the market, and by extension, their comfort level with leaving a role.

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Worker Happiness on the Decline

While workers are more likely to stay in their current role relative to the days of the Great Resignation, it doesn’t necessarily mean workers are content. Instead, the opposite is true – worker happiness declined in 2023. Globally, worker stress is at historic highs and has been since the pandemic, with employee stress being particularly high in North America. In the US and Canada, 52% of employees reported feeling a lot of stress at work the previous day. A study conducted by BambooHR had similar findings, with employee happiness steadily declining from 2022 to 2023 throughout most industries, and more employees feeling a sense of apathy rather than highs or lows.

Worker dissatisfaction has implications for employers — an unhappy workforce is much more likely to be a disengaged workforce. The trend of “quiet quitting” and “acting your wage” first came to prominence during the pandemic, and these trends haven’t gone away. The Harvard Business Review estimates that 50% of the global workforce is quiet quitting, while 18% are “loud quitting,” meaning they are openly sharing their discontentment.

A disengaged workforce translates to lost productivity, which costs the global economy trillions of dollars, with Gallup estimating a cost of $8.8 trillion to the global economy, the equivalent of 9% of global GDP.

Declining worker happiness has implications for employee retention. While employers are no longer faced with the same amount of attrition they observed in 2021 and 2022, attrition is still occurring, and employees continue to have more bargaining power in the market relative to before the pandemic. A study by Ernst & Young found that workers have gained 8% in perceived power over three years, even though employers have gained back some bargaining power in the past year. This means employers are not immune to attrition, reflected in quit rates. While quit rates peaked at 3% during the pandemic, the pre-pandemic high was 2.4%; in December 2023, quit rates sat at 2.2%. It’s true that workers are not quitting like they were during the Great Resignation, but quit rates are not low in a historical context.

Avoiding Turnover in 2024 and Beyond

The Big Stay means less workers are willing to leave their job, which could lead to employers feeling a false sense of security. Attrition is still occurring despite fewer job opportunities in the market, and a large portion of employees are open to new job opportunities, with 34% reporting a willingness to leave their job in the next 12 months. Workers also remain fairly confident in the labor market in the UK: 43% of workers looking for a new job believe that they will find one within a month. Employee retention should continue to be top of mind as organizations are developing their workforce strategies, and flexibility, upskilling opportunities and meaningful work should be at the forefront of conversations regarding retention.

Flexibility

While pay continues to be the main reason workers pursue new opportunities, a variety of other factors help shape a worker’s decision to leave their current role, with flexibility being a deciding factor. In 2023, many organizations continued to focus on return-to-office plans, a shift away from the remote work that many employees became accustomed to and appreciated during the pandemic. While in-office collaboration is important for relationship building, maintaining flexibility is critical. A poll conducted by Gallup suggested that employee engagement was optimal when employees spent 60 to 80% of their time working off site, while the International Labor Organization found that flexible work arrangements lead to greater productivity and improved work-life balance.

Opportunities for Growth and Upskilling

Upskilling the workforce is not only a way to prevent turnover but it’s also increasingly important in the face of long-term talent shortages. Learning and development opportunities are essential for maintaining employee engagement, and promoting a future-ready workforce. For younger workers, opportunities for growth and development are critically important, with Forbes reporting that 70% of Gen Z workers believe career development is more important than salary. A commitment to development and internal mobility can prevent employee turnover.

Meaningful Work

Creating meaning and a sense of belonging are becoming increasingly important to the workforce, and employees who don’t feel their work is meaningful are more at risk of disengagement and ultimately leaving their role. The importance of meaningful work is demonstrated by happiness levels by industry. Workers within the nonprofit industry, where work is typically mission-driven, showed increased happiness levels over the year while the majority of other industries showed decreasing happiness. The preference for meaningful work is particularly strong for younger workers, with 70% of Gen Z stating that meaningful work is more important than salary. With both talent retention and attraction in mind, emphasizing values and meaningful work is of critical importance as Gen Z continues to make up a larger part of the workforce.

While organizations observed record amounts of employee turnover during the Great Resignation, workers have become more cautious as declining job opportunities and economic uncertainty have taken hold. Quit rates have declined significantly from the height of the Great Resignation, but they currently hover near pre-pandemic highs. In short, workers are still quitting, but at slower rates, and employers are not immune to turnover. A change in economic conditions could cause quit rates to go up again, while long-term demographic shifts will lead to a shrinking labor force, meaning the Big Stay will likely be temporary. As organizations navigate the market in 2024, retention strategies continue to be critical to an organization’s success.