More Americans are holding onto their jobs instead of switching, signaling a cooling U.S. labor market. A recent analysis from the Bank of America Institute, using deposit data from millions of customers, shows that job changes have slowed since their peak during the pandemic-driven “Great Resignation”.
During the second half of 2021, over 20 million people quit their jobs, seeking better work-life balance and higher pay. However, since 2022, the share of Bank of America customers changing employers has fallen from a peak of 26% and now sits just above 2019 levels. This trend reflects reduced hiring by employers and greater uncertainty in the market.
“It’s possible that tariffs and general business uncertainty are limiting job switching,” said Taylor Bowley, an economist at Bank of America Institute and lead author of the report. The labor market has cooled sharply, with average monthly job gains dropping from 123,000 earlier this year to just 35,000 between May and July, according to the U.S. Labor Department.
Allison Shrivastava, an economist at job site Indeed, said, “People are not leaving their jobs right now because they’re nervous about the future of the labor market. It is a pretty stagnant labor market.” The Labor Department is due to release its next jobs report on September 5.
Alongside fewer job changes, the pay boost workers get from switching jobs is shrinking. Median raises for those changing jobs were about 7% in July, down from 10% in 2019 and a peak of 20% in 2022, according to Bank of America data. Less than half of new hires negotiated their starting salary, and among those who did, only 48% received higher pay, per ZipRecruiter.
Federal Reserve data reveals that from May through July, wage growth for job switchers matched that of employees who stayed in their roles—a first since 2010. This shift reflects a power change, with employers gaining leverage as job openings decline and workers face fewer opportunities. The Federal Reserve Bank of Atlanta provides this data illustrating wage trends.
The Bank of America report notes that the decline in pay raises and slowed job switching is partly due to employers holding back on hiring amid economic uncertainties, including tariffs and cautious business investment. These factors may also weaken consumer spending in the coming months.
Overall, the data indicate the U.S. labor market is slowing. Workers are less likely to take the risk of changing jobs when raises are smaller and uncertainty greater. Employers’ hold on the labor market is strengthening as job openings drop and hiring slows down.
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The cooling trend raises concerns about future economic growth as wage increases slow and employees settle into their current roles with fewer chances for advancement via job changes. The upcoming Labor Department reports will be watched closely for signs of further labor market shifts.
This labor market transition marks a significant shift from the rapid job and wage changes seen during the peak of the pandemic recovery. It underscores rising caution from both employers and employees about the near-term economic outlook.
