The Boom Is Over
Compensation for new hires is undergoing a contraction following a period of substantial salary increases, prompting individuals to readjust their expectations regarding financial gains when switching jobs.
- In recent years, wages, particularly for job changers, saw an upward trajectory as companies grappled with labor shortages resulting from the pandemic.
- However, with a cooling job market and a more prudent approach to hiring, many businesses are now offering lower starting salaries to new employees than they were just a few months ago, with some instances of significant decreases.
A comprehensive analysis of over 20,000 job titles on ZipRecruiter's platform this year reveals a decline in average pay for a majority of roles compared to the previous year. Notably, sectors like technology and transportation, which experienced intense hiring frenzies in 2021 and early 2022, have observed some of the most notable drops.
Impact Of Higher Rates
This trend represents a sharp departure from the previous year, where three-quarters of advertised job titles experienced an increase in compensation compared to the previous year, as reported by ZipRecruiter. A survey conducted by the online hiring platform in July, involving approximately 2,000 employers, found that almost half of them had reduced pay for recent job openings.
- Although overall wage growth continues and outpaces inflation, with June marking the first instance of such growth in two years due to a slowdown in consumer price increases, the rate of wage growth reached its peak last summer and has since decreased to 5.7%, according to figures from the Labor Department.
- Julia Pollak, Chief Economist at ZipRecruiter, notes that since new hires constitute less than 4% of the total employed workforce each month, adjustments in their pay might not be immediately evident in federal data.
- She attributes the decline in new hire salaries to significant layoffs in several large companies, particularly in the technology sector, which have contributed to the downward pressure on these salaries.
Julia Pollak suggests that other companies no longer feel compelled to match the large salary offers that companies like Meta (formerly Facebook) provide. The decrease in compensation isn't confined to white-collar roles alone.
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