Job-hopping got workers an 18% raise in 2022. Now it’s 8%—and Gen Z is hurt the most

Decades ago, job-hopping was a key strategy for advancing careers and increasing earnings. However, for Gen Z entering adulthood, that advantage has rapidly diminished. In August, only 1.9% of nonfarm employees quit their jobs, the lowest level since 2020. The Bank of America Institute's analysis reveals that those who change jobs only see an 8% pay increase in their first year, compared to a 5% gain for those who remain with their employer—a stark contrast to the 18% boost in 2022 for typical job switchers.

This narrowing gap is particularly concerning as research from the National Bureau of Economic Research suggests that a diverse resume is becoming increasingly valuable for top job aspirants. Today's CEOs often boast about 10 more years of experience outside their existing companies than their predecessors did in 2000, highlighting the growing importance of varied experience.

Today's job market is characterized by "low-hire, low-fire," meaning employers are cautious about hiring due to economic uncertainties. Consequently, companies may have less incentive to pay a premium to attract new talent. As a result, many young workers are "job-hugging," staying in roles they would have left in the past, often while growing resentful.

The Great Resignation, which saw tens of millions of Americans quit their jobs in 2021 and 2022, now feels like a distant dream for recent graduates. Recent data indicates that the typical new hire is now in their late 30s, up from 40.5 in 2022. Gen Z's struggles are exacerbated by the low-hire, low-fire market, which favors candidates with extensive experience over younger, less-experienced job seekers.

The unemployment rate for recent college graduates aged 22 to 27 is around 5.6%, significantly higher than the 4.2% rate for all workers. Many blame AI, which surged following OpenAI's release of ChatGPT in late 2022, for their job insecurity. However, experts like Apollo chief economist Torsten Slok believe that factors such as Fed tightening, trade-war uncertainty, slowing immigration, and the overall low-hire, low-fire labor market are more likely culprits.

Despite these challenges, Gen Z remains determined to find better opportunities. About 55% of Gen Z professionals plan to seek new employment before the end of the year, up 23 percentage points from a year ago. This shift in career expectations indicates that many younger professionals are proactive in finding roles that align with their long-term professional goals.