The Great Stay: Why Job Hugging Is the New Norm—and What Investors Need to Know
The labor market narrative has flipped from the explosive “Great Resignation” to what industry experts now dub the “Great Stay.” But this isn’t just about workers sticking around—it’s about “job hugging,” a phenomenon where employees cling tightly to their current roles, almost for dear life. Korn Ferry consultants recently coined this term, capturing a seismic shift in workforce behavior that savvy investors and financial advisors can’t afford to ignore.
From Job-Hopping Frenzy to Job Hugging Freeze
In 2021 and 2022, the labor market was a whirlwind of job switches, with workers chasing better pay and opportunities. Fast forward to today, and the landscape looks dramatically different. According to Laura Ullrich, director of economic research at Indeed Hiring Lab, the quits rate—the percentage of workers voluntarily leaving jobs—has plummeted to levels not seen since 2016, excluding the initial pandemic shock. This stagnation signals a cautious labor market where hires, quits, and layoffs are all at historic lows.
Why the sudden shift? The answer lies in uncertainty—economic, political, and global. Korn Ferry’s Matt Bohn likens workers’ hesitation to that of skittish investors sitting on the sidelines, waiting for the right moment to jump in. The labor market’s cooling is no accident; it’s a direct consequence of rising interest rates making borrowing costlier for businesses, curbing expansion and hiring.
What This Means for Investors
The job hugging trend has profound implications for investors and financial advisors. First, it signals a broader economic slowdown. Recent data shows more CEOs planning workforce reductions than expansions for the first time since 2020, according to a Conference Board poll. This shift suggests companies are bracing for tighter conditions ahead.
For investors, this could mean a more cautious approach to sectors heavily reliant on labor growth, such as tech and retail. Conversely, industries with more stable or essential services might offer safer havens. For example, healthcare and utilities have shown resilience amid labor market shifts and could be smart portfolio anchors.
The Hidden Cost of Job Hugging: Stagnant Wages and Career Growth
While job stability might seem like a safe harbor, it comes with risks. Research consistently shows that job switchers enjoy higher wage growth than those who stay put. Ullrich highlights that “job huggers” may be sacrificing earnings potential by avoiding new opportunities.
Moreover, staying too comfortable can lead to skill stagnation. Bohn warns that workers who don’t seek additional responsibilities or new skills risk becoming less marketable when the labor market eventually heats up again. Employers may also recalibrate performance expectations, potentially sidelining those who don’t evolve.
What Should Advisors and Investors Do Differently Now?
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Advise Clients to Balance Stability with Growth: Encourage clients to evaluate their career trajectories critically. While job security is valuable, they should also seek opportunities for skill development, even within their current roles, to stay competitive.
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Monitor Labor Market Signals Closely: Investors should watch quits rates, hiring trends, and CEO workforce plans as leading indicators of economic health. These metrics can inform sector rotation strategies and risk management.
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Consider the Impact on New Entrants: The job hugging trend can create barriers for recent graduates and new labor market entrants. This demographic shift may influence consumer behavior and spending patterns, affecting sectors like housing, education, and consumer goods.
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Explore Alternative Income Streams: Given the wage stagnation risk, investors might want to diversify income sources, including dividend-paying stocks or real estate investments, to offset potential earnings plateaus.
What’s Next?
Looking ahead, the labor market’s “holding pattern” won’t last forever. As economic uncertainties resolve—whether through geopolitical stability, inflation control, or technological innovation—job mobility is likely to pick up again. When that happens, expect a resurgence in wage growth and a renewed focus on talent acquisition.
For now, investors and advisors should treat the job hugging phenomenon as both a warning sign and an opportunity. By understanding its nuances and preparing accordingly, they can navigate the current labor market with confidence and position themselves for the eventual upswing.
Unique Insight: A recent Gallup poll found that 60% of employees feel “stuck” in their current roles, citing fear of economic instability as the top reason. This psychological barrier underscores the importance of proactive career planning and financial diversification—advice that can’t be overstated in today’s climate.
Sources: Korn Ferry, Indeed Hiring Lab, Conference Board, Gallup
In a world where labor market dynamics can shift investor fortunes overnight, staying informed and agile is the ultimate competitive advantage.
Source: ‘Job hugging’ has replaced job hopping