U.S. workers face lower engagement as soft hiring limits job mobility

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U.S. worker engagement drop

Highlights

Gallup reports U.S. employee engagement fell to 29% in Q3 2023, its lowest since 2011, with sharper declines among remote and AI-adopting organizations.
September's quits rate rose slightly to 2.1%, while the hires rate reached 3.4%, both remaining modest and limiting workers' leverage for raises or promotions.
New York Fed survey finds only 42.1% satisfied with promotion prospects as of July, signaling lingering career stagnation despite slight improvement since March.

Engagement declines as support concerns grow

As reported by Business Insider, citing Gallup, employee engagement falls to its lowest level since 2011, with the share of engaged workers at 29% in the third quarter after rising through the 2010s and peaking in 2020.

Jim Harter of Gallup says some of the sharpest declines are among hybrid and remote employees at organizations adopting AI. He says fewer workers also report having clear expectations or feeling that someone at work cares about them, suggesting technology adoption may be moving faster than communication and managerial support.

Soft labor market curbs raises and career moves

Broader labor market data also points to frustration for workers who want to improve their pay or move into better roles. Cory Stahle, senior economist at Indeed, says a low-hire, low-fire market offers job security but leaves many employees with less leverage to negotiate higher wages while living costs rise.

The quits rate, a gauge of worker confidence, edges up to 2.1% in September from a roughly 2% average over the prior 12 months, but it remains well below levels seen during the Great Resignation. Daniel Zhao, chief economist at Glassdoor, says soft hiring limits opportunities for both unemployed and employed workers because people cannot as easily leave for better jobs, reducing pressure on employers to offer raises or promotions.

The hires rate reaches 3.4% in September, rising for a second straight month, though it is still in line with the early 2010s. Zhao says many workers are staying in jobs that no longer suit them because they struggle to find new positions, building pent-up frustration that could later translate into higher attrition if the labor market strengthens.

The New York Fed's consumer survey shows 42.1% of respondents are satisfied with their promotion prospects as of July, slightly above March but still low relative to the series history dating back to March 2014. Zhao says workers can still prepare for a better hiring climate ahead, and if conditions improve in 2027, accumulated frustration could quickly turn into another wave of job switching.

In our earlier article on early-career job-hopping and wage growth, we examined research showing that changing jobs is often a key mechanism for boosting pay and reaching better long-term job matches. The piece highlighted evidence that avoiding moves early in a career can materially limit earnings growth, despite the cultural stigma around frequent job changes.

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