What to consider before switching jobs now

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It’s still a workers’ market, even with high inflation and talk of a possible recession.

But there are some signs that could be changing.

A key reason: The Federal Reserve’s 0.75 percentage point rate hike announced on Wednesday likely won’t be the last as it seeks to rein in historically high inflation.

That could lead to “some softening of labor market conditions,” admitted Federal Reserve Chair Jerome Powell on Wednesday.

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Record job vacancies, which totaled 11.2 million in July, could “fall significantly,” he said. The rate hikes could push up unemployment, which stands at 3.7% according to the latest jobs report.

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Recent research from Challenger, Gray & Christmas found layoffs are at record lows as the job market remains strong.

During the first eight months of the year, employers announced plans to cut 179,506 jobs, the lowest total recorded since Challenger began tracking those job cuts in 1993.

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The total for 2022 is also down 27% from 247,326 cuts for the same period in 2021.

Today there are two job openings for every unemployed person in the country, a “quite remarkable ratio,” according to Andy Challenger, senior vice president at Challenger, Gray & Christmas.

“This is the hottest job market we’ve seen in our lives and it’s not going to be forever,” Challenger said.

It’s still a good time to make the switch — with one caveat

With inflation hitting all-time highs, a recent survey by Bankrate.com found that 55% of workers say their income hasn’t kept pace with rising household spending.

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Often the best way to negotiate a big raise is to get a new job, experts say.

“One of the best ways to increase your paycheck is by looking outward,” said Vicki Salemi, careers expert at Monster.com.

Today’s hot job market is bound to cool down. It’s just a matter of when.

You won’t find a better environment to find a new job or renegotiate in a year.

Andy challenger

Senior Vice President at Challenger, Gray & Christmas

Six months ago, Challenger said he had predicted the job market would have cooled more than it had previously. By this time next year it will probably have cooled down significantly.

But now might be a good time for a change, he said.

“If you’re unhappy and you feel underpaid, you won’t find a better environment to find a new position or renegotiate in a year,” Challenger said. “It’s very, very unlikely.”

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A caveat to this is that many companies have last-in, first-out policies that could make newly hired workers more vulnerable if a company decides to make mass layoffs, he said.

Certain sectors are currently more vulnerable to cuts, Challenger research has found. Cutbacks in the tech sector are up 70% from the same period last year. Meanwhile, cuts in fintech are up 765% year-on-year, while the auto industry has seen job losses surge 232%.

Layoffs don’t necessarily have to be the trigger for an increased unemployment rate, Challenger said.

If the labor force participation rate rises – and people currently on the sidelines get back on board – it could increase unemployment as job vacancies shrink and it takes longer for people to find jobs.

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