• Job switchers are bringing in much smaller raises than they did during the post-pandemic period, when employers offered hefty raises to attract workers.

• A Bank of America study showed that job switchers in January received raises that were less than half the size of the pay increases they had received before the pandemic.

• Other research shows that smaller raises for job switchers are part of a larger trend of declining wage growth that stretches back to the 1980s.

Not too long ago, workers had a clear path to earn more pay: find a better job.

But with the job market now showing signs of slowing, there are now fewer opportunities for workers to improve their pay by switching jobs, new research shows.

In January, people who switched jobs received a 4% pay increase, well below the recent peak of around 14% in 2022 and less than half the pre-pandemic 2019 average, according to Bank of America research. And a separate National Bureau of Economic Research (NBER) report found that workers today were half as likely to receive a better-paying outside job offer as they were in the 1980s.

When workers can no longer rely on switching jobs to boost their pay, overall wage growth tends to slow, which can limit consumer spending and affect broader economic growth. For investors and policymakers, weaker wage gains may signal a cooling labor market, influencing interest rate decisions, corporate profits, and the outlook for inflation.

“With fewer open roles, the job‑change premium – the extra pay boost workers typically receive when they switch jobs – has started to compress across the board,” wrote Bank of America economist Taylor Bowley. “This softening matters because job changing remains one of the most effective ways workers secure higher pay.”

With labor scarce after the pandemic, employers raised wages to attract workers, which helped pay increases surge.

After surging to around 3% during the 2022 “Great Resignation” wage-growth boom that followed the Covid-19 pandemic, the quit rate for workers dropped to around 2% in January, according to Bureau of Labor Statistics data. Now, the U.S. labor market has shown signs of slowing, including employers cutting 92,000 jobs in February.

The declining pay gains for job switchers were part of a longer-term trend that has slowed real wage growth to nearly zero since the 1980s, the NBER report found.

A decline in the number of employers as industries consolidate and the growing use of noncompete agreements have curtailed opportunities for job shopping. The result has been a decline in annual wage growth of 0.68 percentage points over that period.