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Job Switching vs Staying Put: What US Wage Growth Data Reveals | Labor Market Update

For years, switching jobs was the fastest way to boost pay. But recent data suggests that trend may be changing.

According to the Federal Reserve Bank of Atlanta, U.S. workers who stayed in their current roles saw 4.1% annual wage growth, slightly higher than the 4% growth recorded by job switchers. This marks the sixth consecutive month where job stayers have edged ahead - an unexpected reversal of the typical hiring-cycle pattern.

What’s driving the shift?

✅ Employers are slowing down new hiring ✅ Companies are exercising caution amid policy and economic uncertainty ✅ Wage increases are increasingly focused on retaining existing talent ✅ Employees are choosing stability over risk in a cooling labor market

The result is a market where loyalty, continuity, and retention are being rewarded more than frequent job changes - at least for now.

This trend has important implications for recruiters, HR leaders, and candidates alike. Retention strategies, internal mobility, and employee engagement are becoming just as critical as external hiring efforts.

The Bank of Japan signaled continued confidence in Japan’s economic recovery and wage momentum, despite lingering concerns over the impact of U.S. tariffs, with Deputy Governor Shinichi Uchida reaffirming the central bank’s readiness to resume interest rate hikes if inflation and growth regain traction.

Speaking in parliament on Tuesday, Uchida acknowledged that uncertainty surrounding U.S. trade policy poses a challenge to Japan’s economic outlook. However, he emphasized that the tight domestic labor market is expected to sustain upward pressure on wages and prices.

"While underlying inflation and inflation expectations may temporarily stall, wage growth is likely to persist thanks to robust employment conditions," Uchida said. He added that Japanese firms are continuing to adjust prices to reflect rising labor and logistics costs.

Despite the external headwinds, Uchida noted that the BOJ would evaluate the broader economic impact of U.S. tariffs without bias and maintain policy flexibility to respond as conditions evolve.

The remarks reflect the central bank’s ongoing balancing act: managing the drag from global trade tensions while remaining attentive to homegrown inflationary trends. Uchida’s comments also align with the BOJ’s recent policy meeting, where interest rates were held steady at 0.5% and growth forecasts were sharply downgraded due to weakening export prospects.

A summary of opinions from the April 30–May 1 meeting released Tuesday revealed a divided board. Some members expressed readiness to restart rate hikes if U.S. policy uncertainty eases, arguing that the broader path to the BOJ’s 2% inflation goal remains intact.

One board member stressed the importance of agility in monetary policy, suggesting that rate hikes could resume if U.S. trade measures stabilize. Another noted that the BOJ’s policy trajectory could shift quickly depending on how global developments unfold.

“There is no change to our tightening stance,” one opinion read, citing persistently negative real interest rates and inflation projections that still point toward achieving the BOJ’s target.

The meeting took place amid heightened global recession fears tied to former U.S. President Trump’s tariff strategy. However, recent market optimism has emerged after the U.S. and China agreed to a 90-day reduction in tariffs, providing temporary relief from trade tensions.

The BOJ also flagged a potential adjustment to its bond tapering strategy. Board members discussed reviewing liquidity conditions across maturities, particularly in response to rising super-long bond yields.

U.S. job growth is expected to have slowed in April, with analysts pointing to heightened economic uncertainty stemming from President Donald Trump’s aggressive tariff agenda as a key factor pressuring the labor market. Despite the cooling pace, companies appear reluctant to initiate layoffs, opting instead to retain staff amid hopes for policy clarity.

The Labor Department's April employment report, due Friday, is unlikely to provide a definitive read on the economy’s direction. It comes on the heels of a disappointing first-quarter GDP figure, which showed a 0.3% contraction as businesses rushed to import goods ahead of steep tariff hikes.

"Liberation Day" Tariffs Send Shockwaves

April 2 marked a turning point when President Trump declared "Liberation Day," announcing broad-based tariffs on nearly all imports—including a 145% tariff on Chinese goods. The move sparked an immediate response from global trade partners and created financial headwinds, prompting warnings from economists about a potential recession.

Although the White House delayed full implementation of the reciprocal tariffs for 90 days, the uncertainty has left businesses frozen in place.

“This kind of uncertainty is like slowly letting the air out of the economy,” said Brian Bethune, economics professor at Boston College. “Companies are holding on to labor now in the hope that this situation will stabilize.”

Slowing, But Still Growing

Economists surveyed by Reuters expect nonfarm payrolls to have risen by about 130,000 in April, down from March’s gain of 228,000. That figure still exceeds the 100,000 monthly jobs needed to match population growth, suggesting a labor market that remains stable, albeit with some signs of fatigue.

The unemployment rate is projected to hold steady at 4.2%. However, softening indicators are beginning to emerge. Major companies like General Motors have already revised their 2025 outlooks, with GM estimating a $4–5 billion tariff-related hit.

Meanwhile, airlines and manufacturers are reacting with concern. China has halted new Boeing aircraft purchases, while Ryanair has warned of canceling orders if tariffs drive up costs.

Resilience Meets Reality

Despite turmoil in trade and policy, economists say businesses are likely to reduce worker hours before turning to layoffs. The average workweek held steady at 34.2 hours in March, down from its peak in 2023.

"The American labor market has shown remarkable strength, but there's only so much it can withstand," said Martha Gimbel, executive director at Yale’s Budget Lab. “Eventually, the uncertainty from Washington will take a toll.”

A number of industry surveys—from the Institute for Supply Management, the Conference Board, and the University of Michigan—are already painting a bleaker picture of consumer and business sentiment.

Policy Shakeups Add to Labor Worries

Further compounding the instability is the Trump administration’s push to downsize the federal government. Under the direction of Elon Musk’s Department of Government Efficiency (DOGE), mass layoffs and funding cuts have targeted key sectors like education and medical research—two of the strongest contributors to employment growth in recent years.

Yet, wage growth remains a bright spot. Average hourly earnings are expected to rise 0.3% for the month, keeping the year-over-year wage gain at 3.9%. This consistency offers some hope that consumer purchasing power might help cushion the economy from broader shocks.

Stagflation Fears Linger—But Not Inevitable

While fears of stagflation—stagnant growth paired with inflation—are growing, some economists are more optimistic.

UK Labour Market Slows Ahead of Employer Tax Hike