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By Hugh Cameron
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In apparent contrast to the labor market “dynamism” which defined the immediate post-Covid period, hiring and quitting continue to lose momentum and overall job “turnover” has reached its weakest pace in nearly a decade.
“Over the last three years, hiring has slowed sharply. And while pay growth has stabilized at levels higher than those seen before the pandemic, the payoff from changing jobs has fallen to its lowest level in ADP data going back to 2017,” Dr. Nela Richardson, chief economist at the employment analytics firm, wrote in a recent report.
“What this means for the labor market is that workers and employers, for now, are sticking together.”
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Why It Matters
The job market collapse that occurred at the onset of the pandemic gave way to an significant boom, but Labor Department data shows that hiring has been on a steady decline in recent years—with rates falling to decade-plus lows across 2024 and 2025.
And amid growing fears over weakening employment conditions, and rising costs stretching household budgets, many have opted to stay in their roles longer than they otherwise might—a phenomenon known as “job hugging,” which contrasts with the “job-hopping” culture of the early 2020s.
What To Know
As Richardson wrote in last week’s report, since the “Great Resignation” of 2021-2022—during which job listings surged while monthly quits reached as high as 4.5 million—resignations have steadily slowed and brought down the overall pace of employee turnover in the U.S.
ADP data shows that turnover—quits plus layoffs as a percentage of total employment—reached 5.8 percent in January, down from 6 percent the same month of last year and the recent January peak of 7.8 percent in 2017.
This trend is most easily observed in white-collar, “knowledge worker” professions across finance, information, and professional business services, according to Richardson.
Turnover in finance has remained flat year-over-year, but dropped to 4.4 percent from 7.8 percent in the information sector, and to 5.8 percent from 6.6 percent in business services.
“The pandemic was declared over in 2023, but the labor market continues to be shaped by its dramatic employment losses and their rapid recovery, when employers couldn’t hire workers fast enough after widespread quits and layoffs,” Richardson writes.
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“That experience has yielded to a more cautious approach to both hiring and firings, with employers doing less of both,” she continued. “For workers, the hyper-competitive labor market of the Great Resignation, which generated larger salaries and improved benefits, has been replaced by a stable, but softer employment environment.”
Federal Reserve Chair Jerome Powell diagnosed this situation as a “low-hire, low-fire” labor market back in September. While subsequent employment reports from both government and private sources have revealed this trend to be neither uniform nor without its outliers, Richardson argues that compared to the “dynamic” post-COVID period, the contemporary labor market is now “defined more by inactivity than vigor.”
What People Are Saying
Nela Richardson, chief economist at ADP, said: “The normal push-and-pull of job gains and pay growth—quantity and price—that once kept the labor market dynamic has weakened, giving way to a market defined more by inactivity than vigor.”
What Happens Next
Employment conditions have shown signs of improvement in recent weeks. According to a recent Labor Department reading, the economy added 130,000 jobs in January—the highest monthly total since December 2024—and the latest layoffs report from Challenger, Gray & Christmas found that job cut announcements fell 55 percent between January and February.
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