Americans aren’t quitting their jobs — and that trend is changing the way the labor market functions.
Since April 2024, the U.S. economy has shed 1.2 million jobs. Hiring has slowed to its lowest pace in a decade, excluding the pandemic dip. The quits rate, once a key marker of worker confidence, has fallen to around 2%, a level not regularly seen since early 2016.
“There’s been a lot of anxiety about the direction of both the economy and the labor market as well,” said James Atkinson, vice president of thought leadership at SHRM, a professional group for human resource management. “I think that is part of what’s keeping people in jobs.”
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Consulting firm Korn Ferry calls the trend “job hugging,” and said fear of the unknown is driving it. Workers are choosing stability over risk, even if it comes at a personal or professional cost.
“A few years ago, [during] the great resignation, people were quitting in large numbers for bigger pay bumps,” said Matt Bohn, a senior client partner at Korn Ferry. “I think wage growth has cooled, job-switching premiums have shrunk, and a lot of workers worry that their pay won’t keep up with rising costs. So I think they’re clinging to stability in a time of uncertainty.”
‘Job hugging’ may mask disengagement
That hesitation has broad implications. While employers might see low turnover as a good sign, experts warn it can mask something more troubling: rising disengagement.
A February study published in the American Journal of Preventive Medicine estimated that employee disengagement costs a typical 1,000-person company around $5 million per year in lost productivity. The average disengaged worker could cost the company $4,000 over the course of a year, while an executive could cost $20,000.
Additionally, 58% of U.S. professionals surveyed by LinkedIn earlier this year said their skills are underutilized in their current roles.
If someone is disengaged but still clocking in, that work has to be absorbed by other team members, which can create additional stress and drag down productivity across the board, said SHRM’s Atkinson.
“Even if people are engaged and people are putting forth their extra effort, they might have to go even above and beyond to make up for some of the teammates who are disengaged,” he said. “So it’s both an individual employee, but then there’s kind of that knock-on effect across the organization as well.”
The trend also poses risks for the broader economy, experts say. Fewer workers moving between jobs could lead to wage growth flattening and companies becoming more cautious. In some sectors, hiring freezes and natural attrition have replaced layoffs, creating a labor market that looks stable on the surface, but lacks momentum.
Still, some workers could benefit in this environment. Gen Z workers, Bohn noted, are adaptable and tech-savvy. This could make them well-positioned to thrive if companies focus on upskilling and smarter workforce strategies.
But in the near term, experts say, unless confidence rebounds and mobility returns, the U.S. economy could face a prolonged period of stagnation.
Watch the video above to learn more about why so many Americans are clinging to their jobs and how it’s reshaping the U.S. labor market.
