Job Market Tightens: Workers Hold On as Layoffs Rise

Key Takeaways

Fewer than 16% of workers in February said they would voluntarily leave their jobs within the next year, according to the New York Federal Reserve survey. That’s the lowest level recorded in more than a decade, underscoring how cautious employees have become in a cooling labor market.
Recent data shows the quit rate has dropped sharply from its peak during the “Great Resignation” of 2022. With fewer job openings available, workers are less willing to take risks, opting instead to hold on tightly to their current positions.
This decline in worker confidence comes as employers trim payrolls. Layoffs are rising, and hiring has slowed, shifting the balance of power back toward employers after years of worker-driven mobility.
The trend signals a broader shift in the labor market: stability is now prioritized over opportunity. For workers, that means fewer chances to move into higher-paying roles, while for businesses, retention may improve even as growth slows.

Workers Stay Put as Job Market Confidence Weakens

Workers are clinging to their jobs as the labor market slows. Employers shed 92,000 jobs in February, and according to the New York Federal Reserve survey, the expected quit rate fell nearly three points to 15.9% the lowest level in more than a decade. This sharp decline signals that employees are increasingly reluctant to leave their positions.

Economists say the drop reflects fading worker confidence. During the “Great Resignation” of 2022, quit rates peaked at 3%, but today they’ve fallen to just 2% in the latest Bureau of Labor Statistics report. With fewer openings available, employees feel stuck, unable to pursue new opportunities.

Cory Stahle, economist at Indeed Hiring Lab, noted that many workers are used to switching jobs every three to five years. Now, with opportunities scarce, they’re holding tight to their current roles. This shift highlights how quickly labor market dynamics can change when hiring slows and layoffs rise.

The broader impact is clear: a low quit rate can slow wage growth and signal weaker economic momentum. As hiring cools and workers stay put, the labor market risks sliding into a “low-hire, low-fire” cycle that weighs on overall growth.

Worker Confidence Fades as Job Market Weakens

The drop in worker confidence comes after employers shed 92,000 jobs in February, raising fresh concerns about labor market strength. The New York Federal Reserve survey shows the expected quit rate fell to 15.9%, the lowest in more than a decade, signaling that employees are increasingly reluctant to leave their positions.

Economists point out that 2025 was the slowest year for job creation outside of a recession in over twenty years. This slowdown has shifted the balance of power back toward employers, leaving workers more cautious and less mobile compared to the rapid churn seen during the “Great Resignation.”

The decline in confidence reflects both fewer opportunities and rising layoffs. Many employees who might otherwise switch jobs every few years now feel stuck, unable to pursue new roles in a tightening market.

For the broader economy, weaker worker confidence can slow wage growth and reduce consumer spending, amplifying fears that the labor market’s cooling trend could weigh on overall growth momentum.

A low quit rate signals that workers feel less confident about finding better opportunities, and that shift has ripple effects across the economy. When employees stay put, wage growth slows because companies face less pressure to compete for talent.

Economic Impact: Why Worker Confidence Matters

Hiring cools at the same time, reducing mobility and limiting the ability of workers to move into higher-paying roles. This combination of fewer job openings and lower voluntary turnover often leads to weaker consumer spending, since households aren’t seeing the same income gains.

Economists warn that this dynamic can weigh on overall growth. With 2025 already marking the slowest year for job creation outside of a recession in more than two decades, the decline in worker confidence adds another layer of concern.

In short, the labor market’s cooling trend doesn’t just affect workers it can drag on the broader economy, slowing momentum and raising the risk of stagnation.

Labor Market Stalls: Quit Rate and Hiring Hit Decade Lows

A weak quit rate is one factor behind the “low-hire, low-fire” conditions that defined the labor market last year. Recent data shows the quit rate has fallen from the highs of the “Great Resignation” in 2022, when 3% of workers voluntarily left their jobs, to just 2% in the latest Bureau of Labor Statistics report. That drop signals workers are far less confident about finding new opportunities.

The same report revealed a hiring rate of 3.3% for employers, also near the lowest levels seen in more than a decade. With fewer openings and slower hiring, mobility in the labor market has cooled significantly, leaving workers more cautious about making career moves.

Economists suggest that part of the decline in hiring activity may not be solely due to employer restraint. Anthony Chan, former economist at JPMorgan Chase, noted that greater worker caution is also playing a role, as employees hesitate to switch jobs in uncertain conditions.

Together, these trends highlight a labor market that has lost momentum. With both hiring and quitting at historic lows, the cycle of job creation and wage growth risks stagnation, raising concerns about broader economic weakness.

Labor Market Confidence Weakens: Immigration and Fewer Openings Drive Decline

Several factors are driving down quit rates, according to economist Anthony Chan. One is the impact of immigration enforcement, which has reduced the supply of migrant workers. With fewer workers available, employers are adjusting their hiring plans, leading to fewer opportunities overall.

As job openings fall from their 2022 highs, workers are less likely to quit the positions they already hold. The decline in available jobs has created weaker prospects, leaving employees reluctant to take risks in a slowing labor market.

Chan noted that workers see fewer attractive opportunities today compared to the peak of the post-pandemic expansion. This shift in perception underscores how quickly confidence can erode when hiring slows and layoffs rise.

The broader implication is that reduced labor mobility can weigh on wage growth and economic momentum. With fewer openings and lower quit rates, the labor market risks sliding into stagnation, amplifying concerns about long-term growth.

The Bottom Line

The labor market is showing clear signs of strain. With employers shedding jobs and hiring slowing to decade lows, workers are clinging to their positions rather than seeking new opportunities. The quit rate has dropped from the highs of the “Great Resignation” to just 2%, reflecting diminished confidence and fewer attractive openings.

Economists highlight that immigration enforcement and reduced labor supply are also shaping employer hiring plans, further limiting opportunities. This combination of weaker job creation, rising layoffs, and cautious workers has created “low-hire, low-fire” conditions that stall mobility.

For employees, the result is a sense of being stuck unable to pursue better roles or higher pay. For the economy, it means slower wage growth, weaker consumer spending, and heightened risk of stagnation.

The takeaway is clear: the labor market’s cooling trend is not just about fewer jobs it’s about fading worker confidence, which can ripple through the broader economy and weigh on growth.