In the current U.S. job market, many workers on the prowl for new positions are encountering an unexpected challenge — not just the scarcity of job offerings, but a noticeable absence of wage growth, with some salaries witnessing a downturn.
According to a recent report by ZipRecruiter, out of 2,000 U.S. companies surveyed, nearly half testified to diminishing pay for certain roles, the BBC reported.
Yet experts suggest that this trend is not a simple case of companies exploiting the job market to slash costs. This phase of salary stagnation — and in some instances, reduction — may well be the aftershock of a pandemic compensation surge during the height of the scramble for talent, labeled as the “Great Resignation.”
“There is now less competition to hire workers – and therefore less need to boost wages,” Nick Bunker, U.S.-based director of North American Economic Research at Indeed, told the BBC. “Job postings have dropped quite a bit, while the supply of workers has grown.”
The surge in U.S. wages peaked in early 2022 with a year-over-year wage growth reaching 9.3%. However, following that zenith has been a marked decrease parallel to the dwindling demand for labor. By January 2024, that growth rate had shrunk to 3.6%.
With fewer positions available, job seekers are facing tighter conditions when it comes to negotiating for higher pay or even securing a favorable starting salary. For many, the focus has shifted to simply obtaining any employment available, reducing their leverage in pay discussions.
Amidst inflation, a salary unchanged from previous years might be perceived as a reduction in real terms. There might also be cases where salaries for similar jobs in 2022 are directly advertised lower today, possibly due to a larger workforce vying for fewer jobs.
“We saw a massive bull run in the market during the pandemic, where there was a big increase in baseline compensation for workers because of talent shortages,” said Boston-based Chris Rice of the U.S. executive tech recruiting firm Riviera Partners. “We’re still seeing a market reset that’s ongoing. An oversupply means compensation has dropped because the demand is no longer there.”
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