Latest / Stagflation Conversations with Fexingo: High Inflation, Slow Growth, and 1970s Echoes / Why Stagflation Is Reshaping Job Hopping Trends
Transcript
- Lucas: So we talk a lot about how stagflation is reshaping industries — insurance, used cars, even pet food. But there's one thing that's happening under the radar that affects almost every working person directly, and that's how people are changing jobs — or rather, how they're not. Luna: You mean job hopping. Because I feel like we've been in this cycle where everyone's chasing a raise by switching companies every 18 months. Lucas: Exactly. And that trend — the 'Great Resignation' mindset — has been a defining feature of the post-pandemic labor market. But the data we're seeing in mid-2026 tells a very different story. The May jobs report isn't out until Friday, but we already got the ADP private payrolls number on Wednesday: 122,000 jobs added. That's not a collapse, but look at the composition. Luna: What do you mean by composition? Lucas: ADP breaks it down by sector and by firm size. And what we're seeing is that a disproportionate share of those new hires are in lower-wage service industries — leisure, hospitality, retail. Meanwhile, higher-wage sectors like professional services and information are actually pulling back on hiring. And more of those new jobs are temporary or part-time. Luna: So people are taking whatever they can get, not necessarily a step up. Lucas: Right. And that's consistent with what we're seeing in the quit rate. The JOLTS data for April — that's the most recent we have — showed job openings actually ticked up to 7.6 million. That sounds like opportunity. But the quits rate, which measures voluntary separations, has been trending down. It's now at levels we haven't seen since 2020. Luna: So people are staying put even though there are openings. That's the opposite of the Great Resignation. Lucas: Exactly. And there's a clear economic logic. When inflation is eating into real wage gains — average hourly earnings are up to $37.50, but CPI is still running at over 3 percent year-over-year — the marginal benefit of switching jobs for a 5 or 6 percent raise gets eaten up by uncertainty. If you leave a stable job and the new one doesn't work out, you're facing a labor market where hiring is slowing in higher-paid fields. Luna: And with the unemployment rate at 4.3 percent, it's not like it's easy to find another job quickly if you jump and it fails. Lucas: That's the key. The unemployment rate has been flat at 4.3 percent for a couple of months now. But initial jobless claims just jumped to 225,000 — up from 212,000 the prior week. That's a signal that layoffs are ticking up, even if slowly. So the calculus shifts from 'I can get a better offer' to 'I need to protect what I have.' Luna: And this has to have implications for productivity too. If workers are staying in roles they might have outgrown, aren't we losing some of that dynamism? Lucas: That's a really good point. Some economists argue that job hopping is a kind of reallocation engine — people move to where they're more productive and better matched. When that slows, you get what they call 'labor market sclerosis.' And in a stagflation environment, where growth is already sluggish — real GDP grew at only 1.6 percent annualized in Q1 — you can't afford that drag. Luna: So the narrative has flipped. We went from 'nobody wants to work' to 'nobody wants to leave.' Lucas: Exactly. And I think it's a bigger deal than most people realize. Because if you're an employer, you might think, great, lower turnover means lower recruiting costs. But it also means you're stuck with a workforce that may not be optimally allocated. And if you're a worker, you might be forgoing higher earnings in the name of stability — which in a stagflation environment might be the right call, but it's a trade-off. Luna: It also changes how we think about wage inflation. If fewer people are quitting to chase higher pay, that should put downward pressure on wage growth overall, right? Lucas: In theory, yes. And we are seeing average hourly earnings growth moderate. But it's not falling off a cliff. Because there's still competition for workers in certain sectors — especially lower-wage service jobs where turnover is traditionally high. So you get this two-tiered labor market: high-wage professionals are staying put, while low-wage workers are still job hopping, but for smaller gains. Luna: Which feeds right back into the stagflation narrative — uneven growth, persistent inflation in services, and a general sense of stuckness. Lucas: Exactly. And that's what makes this episode different from what we covered in the past. We've talked about barter networks, gold bugs, even pet food. But the way people move — or don't move — through the labor market is maybe the most fundamental signal of how stagflation is changing behavior. Luna: I want to dig into one more number. The ADP report said 122,000 jobs. But the whisper number for Friday's official payrolls is around 180,000. If it comes in below that, it would confirm the trend. Lucas: Yeah, the consensus is around 180,000. But ADP has been underestimating official payrolls recently. So even if the official number is higher, the composition matters more. If most of those jobs are in low-wage services and part-time, the story holds. Luna: And what about the long-term unemployed? There was that CNBC piece about hidden costs. Are we seeing people dropping out of the labor force entirely? Lucas: The labor force participation rate has been stubbornly below pre-pandemic levels. And long-term unemployment — people out of work for 27 weeks or more — is creeping up. That's a classic stagflation symptom. When people are out for that long, their skills atrophy, and they become less attractive to employers. That creates a structural drag on the economy. Luna: So the people who do have jobs are holding on tight, and the people who don't are finding it harder to get back in. Lucas: Right. And that's a recipe for a very different kind of labor market than the one we saw in 2021 or even 2023. It's more fragile, more cautious, and more segmented. Luna: Before we wrap, I wanted to mention something. If walking through the economy with us has made something click — maybe you've thought about this trend differently after listening — that's exactly why we do this show. And it only exists because a small group of listeners chip in monthly at buy me a coffee dot com slash fexingo. No ads, no sponsors, just people who find value in it. Lucas: Yeah, it's a real thing. We've never run a single ad. And that's because a handful of listeners cover the costs. It's not a big number, but it's consistent. And it allows us to keep drilling into these specific angles without worrying about selling anything. Luna: Exactly. So if that's something you've been thinking about, that's the link. Now back to the labor market. Lucas: So to bring it all together: the era of easy job hopping is on pause. Workers are prioritizing stability over upside. That has implications for everything from wage growth to productivity to how companies think about retention. And in a stagflation environment, that might be the new normal for a while. Luna: It makes you wonder — if the economy picks up, will we see a wave of pent-up quits? Or has the psychology shifted permanently? Lucas: That's the billion-dollar question. I think we'll be revisiting this in six months. But for now, the data is pretty clear: job hopping is out, and hunkering down is in.