In numbers: Low wages pose a major challenge for employee retention

– About 56% of workers planning to quit their jobs this year cited low pay as the top reason – ResumeBuilder.

– Wage growth has slowed in recent years, with expected wage increases at 3.5% in 2025, up from 3.6% in 2024 and 4% in 2023 (Payscale).

– Only two in ten organizations expect a higher compensation budget than last year – Payscale.

– Nearly half of U.S. companies say salary budgets are lower this year than last year – WTW.

-The overall median salary increase fell to 4.1% in 2024 from 4.5% in 2023 – WTW.

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For workers currently planning to leave their jobs, low pay is the ultimate motivator. This is somewhat of a change from the early post-pandemic period, when workers reported they would take a pay cut for more flexibility and the ability to work remotely.

According to a Resume Builder survey of over 1,000 workers, low pay was the top reason given by workers considering leaving their jobs this year. The second most common reason given by workers considering leaving their jobs was a desire for better benefits, followed by too much stress in their current job.

With fewer remote work job postings, inflation, and the rising cost of living, salary is now of utmost importance to employees. However, many employers are in a bind as they face economic uncertainty and many are unable to provide salary increases to retain the best talent.

In Resume Builder's survey, many of the respondents were younger workers — either Gen Z or Millennials, said Stacie Haller, career counselor at Resume Builder. Many of them took their first or second full-time job and then found that the salary just wasn't enough to support them. That leads many younger workers in particular to take on side jobs or other work to supplement their income.

“It’s this whole new, younger group that’s coming into the market and thinking: Now I have to make more money,” Haller said.

The trend toward greater pay transparency is also changing the landscape: Many employers are listing salary ranges in job postings that give workers a better idea of ​​how much they could earn elsewhere. And salaries are lower today than they were during the “Great Resignation,” when the economy was stronger and the labor market was much tighter.

“Salaries have now returned to less inflated levels, and instead of offering retention bonuses and annual raises, companies are now returning to pre-pandemic offers,” said Jenni Kavanagh, vice president of the Harnham Group, a data talent and recruiting firm.

“The result is that while employers’ offers may have declined, candidates’ salary expectations are slower to follow suit,” said Kavanagh.

Managers and HR directors in a tight spot can offer some other incentives besides salary to counteract employee retention problems. Such as flexibility, which remains important for job seekers and those considering leaving their current job, says Robin Erickson, vice president of human capital at the Conference Board.

In recent years, many workers have lost the flexibility they had from telecommuting as they have been forced to return to the office. Employers who offer more flexibility in work location and hours have an advantage over those who don't. And flexibility is something employers may be able to offer as part of other cost-cutting measures, too.

Other key benefits for employees include more paid vacation and other perks aimed at well-being and a better work-life balance.

“Salaries have now returned to less inflated levels, and instead of offering retention bonuses and annual salary increases, companies are now returning to pre-pandemic offers.”

Jenni Kavanagh, vice president of the Harnham Group, a data talent and recruitment firm.

Flexibility is key for many higher-paid and more experienced workers, says Kyle Samuels, CEO of executive search firm Creative Talent Endeavors. A candidate recently told him he would accept a 15 percent lower salary for a job if it didn't require him to relocate.

“If you're 40 years old and you're an executive at a company making $600,000 a year and you own a nice house with equity in it, you might be able to make some sacrifices,” Samuels said. “But as we said, if you're younger and you think, 'I need to make more money because I don't know if I'll ever be able to afford a house,' things are a little different.”

Ultimately, some experts predict that the “Great Staycation” we are currently in is slowly transforming or will transform into “Great Resignation 2.0” once economic and political conditions in the United States stabilize.

“I firmly believe that people want the flexibility they want, and the talented people will try to find other jobs once they feel like the world is no longer falling apart for them,” Erickson said.