The era of hefty salary jumps for new hires seems to be coming to an end as businesses adjust to a cooling job market. The trend of inflated wages, particularly for job switchers, has been a notable feature of the pandemic-induced labor shortages of recent years. However, with hiring becoming more cautious and circumspect, many companies are now offering new recruits less compensation than just months ago, leading workers to recalibrate their financial expectations when switching jobs.
Data from ZipRecruiter reveals that among postings for more than 20,000 job titles this year, the average pay for a majority of roles has declined from last year. The most significant drops have been observed in sectors such as technology and transportation, which previously saw frenzied hiring sprees in 2021 and early 2022. This stark turnaround contrasts sharply with the situation in 2022 when compensation for three-quarters of advertised job titles rose from the previous year.
New Hires See Shrinking Salaries as Job Market Cools
Following years of substantial salary increases, the wages for new hires are starting to contract. This shift requires workers to adjust their financial expectations when transitioning to a new job.
Market Changes and Wage Declines
In recent years, wages, especially for individuals changing jobs, had been rising as companies vied for employees during pandemic-induced labor shortages. However, as the job market cools and businesses become more cautious with their hiring strategies, many are offering new recruits less than what they were paying just a few months ago.
According to data from ZipRecruiter, the average pay for a majority of roles has declined from last year. This trend is particularly noticeable in technology, transportation, and other sectors that experienced frenzied hiring sprees in 2021 and early 2022. For example, Chanteal Brayboy, a 25-year-old job seeker in user-experience design, has observed a roughly $10,000 drop in the advertised salaries for jobs she’s interested in, compared to a year ago.
Impact on Different Industries
The decline isn’t limited to white-collar roles. During the pandemic, a pizza restaurant in Unionville, Tennessee, raised wages to attract new workers. However, the restaurant’s starting pay has since been reduced. Similarly, the Denver-based retail company Appliance Factory & Mattress Kingdom, which was paying $20 an hour a year ago, is now hiring administrative workers for around $18 an hour.
Data from Gusto, a payroll and benefits software company, reveals that pay rates for new hires are 5% lower than they were last year. However, in-demand workers in certain industries such as tourism and construction are still seeing pay increases.
Takeaways
This shift in the job market is a stark contrast to the competitive hiring environment seen during the pandemic, where companies were offering high wages to attract workers. The current trend is a result of businesses becoming more cautious about what they’re willing to pay for new recruits.
While employers now have more leverage over pay, they should tread carefully to avoid alienating potential employees. To control costs without dissuading applicants, companies are resorting to strategies such as increasing performance incentives while reducing base salaries for certain roles.
In the end, the changing job market dynamics highlight the need for both job seekers and employers to remain flexible and adapt to the evolving landscape.
