Leaving a job now pays 3 points more than staying, down from 11 in 2022

Split the shrinking premium by side and almost all of it belongs to the people who moved. Switchers' annual after-tax pay growth fell about 10 points between 2022 and the first quarter of 2026, while stayers' fell 2 ^[15]. The gap went from 11 points to 3 ^[12][13]. Stayers' smaller raises did not help close it. They pushed the other way, so the 8-point narrowing is the 10-point drop in outside offers less the 2-point drop inside ^[14].

So the pressure that eased sits on the hiring line, or rather on the price of hiring someone away from another employer. Bank of America Institute economists wrote that in a low-hire, low-fire market, companies may see less need to pay extra to attract new staff ^[5]. Workers have answered by staying: 1.9% of nonfarm employees quit in August, according to the Bureau of Labor Statistics ^[2]. Fortune calls it "job-hugging", workers staying in roles they would once have left ^[6]. What hiring budget exists is going to experience. Revelio Labs puts the average age of a worker starting a new job at 42 in 2025, up from 40.5 in 2022 ^[7].

The retention saving is smaller. Employers trimmed staff raises from 7% to 5% ^[3][4], real money on a large payroll. Measured against a mover's raise, though, loyalty pays more than it did: a stayer's raise was about 39% of a switcher's in 2022 and about 63% in the first quarter of 2026 ^[16].

The seven-year low is also a first-quarter figure. A September update from the institute found switching premiums at their highest level in more than three years, with Gen Z still gaining most from a move, though premiums remain below pre-pandemic levels ^[1]. Fortune did not publish the September figure. Intent is climbing as well: 55% of Gen Z professionals plan to look for a new job before year-end, up from 32% a year earlier, according to Robert Half ^[11]. And the series is built from Bank of America customers' deposit data ^[3], a large sample that is still one bank's customers.

The young have the least room to act on that intent. Unemployment for recent college graduates aged 22 to 27 was about 5.6% in the second quarter, according to the New York Fed, against 4.2% for all workers in September ^[8][9]. Torsten Slok, Apollo's chief economist, has argued that Fed tightening, trade-war uncertainty, slowing immigration and the "general low-hire, low-fire labor market" are likelier drivers than AI ^[10].

I think the cheaper switch was mostly a cheaper hire, and the September update suggests employers are already paying some of it back. If later deposit readings show stayers' raises sliding below 5% while switchers hold near 8%, the retention saving is bigger than this data shows, and that view is wrong.