Over the past few months, a new trend known as “job hugging” has taken the labor market by storm. Workers aren’t even choosing to leave their jobs and look elsewhere. This trend reflects how unsure American workers are growing about their economic future. The expansive majority are opting to hold on to their jobs “with a death grip.” The idea is enough to get experts concerned, who say the practice can be dangerous for people who get overconfident in their jobs.
Matt Bohn, an executive search consultant at Korn Ferry, says a perfect storm of factors in today’s economy are driving this trend. “There’s quite a bit of uncertainty in the world — economic, political, global — and I think uncertainty causes people to naturally,” he explains. As a result, employees are afraid to take the leap and make major career advancements, resulting in a paralyzing negative effect of stagnation.
Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab, helps us break it down. She notes that, as a general rule, job switchers have more wage growth on average than non-switchers. “Job switchers generally command higher wage growth than those who remain in their current roles,” Ullrich states. It also underscores the substantial savings that can be had by looking for greener pastures.
Even with the incentive to change occupations, this labor market makes it difficult to do so. Ullrich observes that the so-called quits rate, a barometer of workers’ perceptions of the broader labor market, remains at historic lows. “There is this stagnation in the labor market, where the hires, quits and layoff rates are low,” she says. This stagnation in turn can make it more difficult for new entrants—like recent grads—to get a job in a highly competitive environment.
The hiring rate has remained fall off a cliff. As of March 2022, it’s now at its fastest rate in more than a decade, excluding the first months of the Covid-19 pandemic. This economic slowdown has caused far more CEOs to say they’re planning to cut their workforce than increase it. A newly released Conference Board quarterly CEO poll found 34% of CEOs intending to reduce their workforces. By comparison, just 27% plan to bring on additional staff.
As market analysts caution, you get too comfortable in your position, you stop growing. Not only will you potentially lose amazing opportunities to broaden your skillset and grow into new areas of responsibility, Bohn cautions that getting stuck in a bad job can seriously injure future career marketability and advancement once conditions pick back up again. “Workers who get too comfortable in their current role may stagnate rather than take on additional responsibility or learn new skills,” he notes.
All in all, while job hugging might guarantee short-term job security for some, it might trade that off with future long-term earnings growth. Moving into an era with different labor market dynamics, workers will need to balance the benefits of stability with the possibility of stagnation.