Job-Hopping No Longer Pays: How to Rethink Your Recruiting Strategy

The financial incentive for U.S. workers to hopscotch from job to job to collect more generous starting salaries has hit the skids this year. For the first time in a decade, it pays nearly as well for people to stay put in their current jobs and aim for annual merit increases than it does to jump ship for a different role.

As the allure of the job-switching pay premium fades, CHROs are adjusting their recruiting and retention strategies to meet this new reality. Rather than focusing on luring candidates with higher starting pay, HR leaders will increasingly showcase the long-term value of internal growth opportunities, skill-building initiatives, and internal mobility programs.

Wage Growth Declines for Job Switchers

The ability to “hop to the top” of pay scales is not over, but the cooling labor market is giving fewer financial incentives for people to leave their jobs for greener-pay pastures.

In the first two months of this year, people who switched jobs increased their wages by 4.8%, according to data from the Federal Reserve Bank of Atlanta. In comparison, workers who remained in their current roles increased their wages by just a fraction less: 4.6%.

The wage growth gap between job hoppers and job stayers has shrunk dramatically in the past few years. In 2023, job switchers were hauling in average salary bumps of 7.7%, compared with a 5.5% rate for people who stayed in their jobs. What has changed?  

After the onset of the pandemic in 2020, the years 2021-2023 saw an unprecedented boom in job openings and a corresponding expanded rate of new hires. Companies were desperately trying to attract talent during this period, which put job seekers in an excellent bargaining position for starting salaries. Fast forward to 2025, and the rate of U.S. job openings has fallen significantly, though it still remains high by historical standards. At the same time, the rate of hires has also declined and is now actually below the historical average.    

“In short, overall labor demand has cooled, and employers aren’t hiring nearly as aggressively,” said Justin Ladner, senior labor economist at SHRM. “Thus, the wage growth advantage that job switchers enjoyed during those post-COVID years has shrunk, as switchers have fewer opportunities to generate wage gains due to a decrease in job openings. And they have less salary bargaining power if they do obtain a new job offer.” 

The power of job switchers to collect sizable pay bumps has fluctuated over the past few decades. According to the Atlanta Fed’s data, the wage growth rate for job switchers has significantly exceeded the wage growth of job stayers at specific periods, including during the dot-com boom of the late 1990s, the hot labor market right before the 2007-2009 Great Recession, and the few years of a strong labor market right before the pandemic hit in 2020.

Looking at the long-term picture, however, the U.S. labor market is still facing an overall labor shortage, which complicates the wage outlook. The Bureau of Labor Statistics jobs report released on March 7 showed that in January 2025, there were nearly 700,000 more job openings in the U.S. than there were unemployed people. The long-term demographic trends of lower birth rates and a surge of retirements among Baby Boomers point toward a hiring challenge in the decade ahead, which could put upward pressure on wages.

How Should Your Organization Respond?  

The declining wage growth for job switchers is an indicator that organizations aren’t competing as intensely for new talent as they did just a year ago. Plus, it signals employees are more hesitant to take the risk of jumping to a new employer amid the current darkening economic clouds and political uncertainty.

HR executives would welcome any decreased pressure on wages. In SHRM’s recent CHRO Priorities and Perspectives report, HR leaders ranked wage inflation as the biggest macroeconomic challenge facing their organizations, with nearly two-thirds (61%) reporting it as a challenge in 2025. The other top economic challenges were inflation/rising cost of goods and services (47%), economic uncertainty (37%), and increasing competition (31%).

As the labor market cools and wage growth for job switchers declines, HR executives have an opportunity to recalibrate their recruiting and retaining strategies. CHROs should consider the following actions:

Refine compensation priorities. Instead of leaning into external hires who command premium starting salaries, organizations should be able to redirect more of their compensation budgets in other directions, including to bolster retention. 

“The current labor market is significantly softer than it was a couple of years ago, so the need to significantly bump up salary offers to attract talent is less pressing,” Ladner said. “In fact, employers could find that it makes more sense to adjust along other dimensions of benefits that job seekers might also value.” That includes everything from performance-based pay to retention bonuses to more job flexibility.    

Prioritize career growth and skills development. With fewer financial incentives to switch jobs, your employees will likely put greater value on career progression and building skills. Expand access to professional development programs, mentorship opportunities, and continuous learning. Encourage managers to work with employees to show them a clear career path within the company.

“Employees don’t want to remain in the same position if they don’t see it going anywhere. They also don’t want to do tasks that are repetitive with no new scenery,” said Sangeetha Gururaj, senior vice president of people and talent at software testing firm Qualitest. “Longing for growth, they desire to be in a constant state of learning and accomplishment.”

Improve your employer brand and value proposition. Make sure candidates understand what they’re getting at your organization beyond a paycheck. On your careers site and in other recruiting efforts, highlight company culture, work/life balance, and opportunities for professional and personal growth.