Leaving your job for that shiny new opportunity doesn't pay like it used to.
New data out Wednesday from ADP shows median year-over-year pay increases for job switchers fell to 9% in September, the slowest rate of growth since June 2021. At their peak, workers saw roughly 16% year-over-year pay increases on average, more than double that of those who stayed at their job.
But Wednesday's data showed the difference between wage growth gained by leaving a job versus staying is at its slimmest margin since October 2020.
"We are seeing a steepening decline in jobs this month," ADP chief economist Nela Richardson said in a press release. "Additionally, we are seeing a steady decline in wages in the past 12 months."
The ADP National Employment Report report showed 89,000 private payroll jobs were added to the US economy in September. Economists surveyed by Bloomberg had expected job additions of 150,000 for the month. The report comes amid a busy week for labor market news that kicked off in earnest with the latest Job Opening and Labor Turnover Survey, or JOLTS report, which revealed job openings unexpectedly picked up in August.
The surprise headline of the report sent stocks lower as investors feared a strong economy may mean more interest rate hikes from the Federal Reserve. But in the fine print, there were signs of the economy cooling.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
After years of aggressive hiring in a hot labor market, the hire rate in August was 3.7%, unchanged from the month prior, and below its pre-pandemic level. The quit rate was also unchanged in August at 2.3%, down from the historically high 3% seen in April 2022, showing fewer workers are seeking opportunity outside of their current job.
"The improved rate of retention comes as the pay premium for switching jobs has narrowed and a declining share of workers view jobs as plentiful," Wells Fargo senior economist Sarah House wrote in a research note on Tuesday. "The lower rate of voluntary turnover should further reduce wage pressures and job openings as employers have fewer positions to backfill."
Easing wage pressures would likely be a welcome sign in the Fed's fight against inflation. Federal Reserve Chair Jerome Powell has repeatedly said a rebalancing of the labor market, including a better balance of job supply and worker demand, is needed to keep inflation on its downward path. Part of that better balance includes more normal wage gains.
"Nominal wage growth must ultimately slow to a rate that is consistent with 2 percent inflation," Powell said during his speech at the Jackson Hole Symposium.
More labor market data is expected on Friday. The September jobs report is anticipated to show there were 170,000 jobs added to the economy last month, slightly lower than in August, with the unemployment rate expected to move down from 3.8% to 3.7%.
The report will bring another look at wages, a closely watched indicator of how much leverage workers are exerting in the labor market. Wages are expected to have risen 0.3% on a monthly basis in September, up from 0.2% in the month prior. On a yearly basis, economists project 4.3% yearly wage growth unchanged from August.
Josh is a reporter for Yahoo Finance.
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