By Allison Ebner
If the last few years felt like a wild ride for job seekers and employers alike, 2025 is shaping up to be just the opposite, where everyone clings to stability like a life raft. Enter the age of “job hugging,” where workers hold onto existing roles instead of risking a switch in wildly uncertain economic times.
According to recent data, the U.S. voluntary quit rate has dropped to 2.0% in June 2025, down from a high of 3.0% in November 2021—the lowest we’ve seen since before COVID hit. This shift reflects employees’ growing desire for security amid economic turbulence.
But holding tight doesn’t mean that employees are thriving with higher productivity. A new phenomenon, dubbed “quiet cracking,” has emerged, where employees remain in their roles but begin to disengage, burn out, or struggle silently without talking with their leaders. Globally, employee engagement has dipped to 21%, down from 23% last year, translating into a staggering $438 billion in lost productivity overall.
At the macro level, the labor market remains resilient but not unscathed. Unemployment is stable at 4.2%, but continuing unemployment claims have risen to nearly 1.97 million—a figure not seen since November 2021, signaling labor market softness that can be contributed to the volatile economy, changing federal mandates and potentially the rise of AI replacing human activity in our workplaces.
So, what does “job hugging” mean for employers? Even though employees may be staying put, it does not guarantee their loyalty or their performance. Retention now requires intentional engagement, new performance management metrics and an increase in communication between our individual contributors and their leaders. A mindful refresh of our total rewards should also be on the ‘to do’ list for every organization. It’s time to revamp our compensation benchmarks, benefits offerings, wellness initiatives, employee development programs and recognition plans as we map out our workforce plans for the future.
What’s Next for HR and Employers?
- Labor market stability doesn’t mean immunity to quiet quitting. One of the disadvantages of job hugging is that your poor performers are staying put! Redefine your expectations for every role and double down on performance metrics.
- Consider creating an incentive-based variable compensation plan that rewards high performers and encourages them to stay with you. There is nothing more demotivating to a person with a strong work ethic than seeing a poor or subpar performer being paid the same as they are.
- As employers, we should be spending time evaluating HOW our organizations are running and how each role fits into the matrix of operations. Are we maximizing technology? Using AI to build better processes? Creating more opportunities for people to think innovatively and letting technology pick up the repetitive tasks?
In an era of stagnant labor market movement, savvy employers are connecting with their top performers to create retention and engagement, creating performance metrics to reevaluate poor performance and focusing on ways to innovate their organizations around expansion, enhanced customer connections and planning their future workforce map.
Give me a call if our team can support your plans!