For those who’ve enjoyed flitting from job to job, a bumper season is ending.
A three-month moving average of annual wage increases from the Atlanta Federal Reserve Bank’s wage tracker shows that US job switchers got the highest wage increase last July, when the measure touched 8.5%. Since then, it has gone up and down, and has been going steadily down since November.
The gap in wage gains between people who switched jobs and those who stayed in their jobs is now closing. On average, job-hoppers have almost always gotten better pay raises than job-stayers. But in the past, the difference has been usually hovered around 1 percentage point. In July, though, the gap widened to 2.6 percentage points.
Both stayers and switchers are now seeing their wage growth slow, and switchers are getting smaller and smaller wage bumps in their new jobs. (At the moment, those who change jobs stand to get an average 7.3% raise every year, while those who stay get a 5.4% raise.) That suggests the demand for workers has reached, or is at least nearing, its peak.
To a certain extent, the labor market is likely cooling on its own because even a shortage of workers isn’t overcoming the historic imbalance between employers and employees in the US. The volume of income that workers take home as a proportion of what the US economy produces is still falling.
The Federal Reserve also raised interest rates at a historic clip last year, which is dampening labor demand in interest-rate sensitive sectors.