More U.S. employees are hugging tight to their jobs. Here’s why.

Employees in the U.S are clinging to their jobs in a labor market characterized by historically low rates of worker turnover, recent data shows. 

Data from ADP Research, a provider of labor market analysis, shows that workers are leaving their jobs either through quitting or layoffs at an unusually low rate. Measured by the rate of employee turnover, so-called job “stickiness” is at a multi-year high as many workers hunker down amid significant economic uncertainty. The pace of job turnover hit a nine-year low in January, at 5.8%, ADP found. 

“What this means for the labor market is that workers and employers, for now, are sticking together,” ADP chief economist Nela Richardson said in a recent report.

Hug it out

This dynamic, sometimes referred to as “job hugging,” is currently most visible among white-collar workers in finance, information technology and professional business services. These are also among the industries that are most exposed to AI-driven changes in hiring, with a number of large companies attributing recent job cuts to AI. 

“These sectors have made headlines recently as advances in artificial intelligence both augment employment (through demand for developers, for example) and curtail it (by automating tasks),” Richardson wrote. 

Relatedly, fears that increasingly advanced AI tools could displace white-collar employees are driving renewed interest in blue-collar careers among some young job-seekers.

Why more workers are staying put

According to Richardson, the relatively sluggish state of the current labor market reflects a hangover from the pandemic, when robust hiring followed dramatic employment losses. 

The current trend also reflects a stark contrast to the period during the pandemic known informally as the “Great Resignation,” when employees quit at record rates and job listings soared.

“That experience has yielded to a more cautious approach to both hiring and firings, with employers doing less of both. For workers, the hyper-competitive labor market of the Great Resignation, which generated larger salaries and improved benefits, has been replaced by a stable, but softer employment environment,” Richard said. 

Anecdotal evidence suggests some workers are hunkering down in their jobs because AI is gobbling up the kinds of roles they would have once pursued. 

AI effect

Radouane Khiri, a full-stack web developer who works at wireless carrier US Mobile, said his industry experience has allowed him to use AI coding tools to become more efficient at his job, which involves writing code for new web features. 

“You need to know what you’re doing in order for the AI to do a good job, because you need to give it specific prompts,” he said. “If you’re not a professional, it won’t do what you want it to. But I use it like a junior coder.”

Still, Khiri noted that his company is hiring fewer entry-level developers than in the past. 

“Now AI can do those small tasks that used to take a week in a much shorter period of time,” he told CBS News. “I think since AI took over, startups are hiring very few junior developers, especially right out of college.”