Two-thirds of U.S. companies have implemented hiring freezes as the labour market shifts dramatically, with employees abandoning job-hopping in favour of staying in their current roles, according to new research.
A survey of 600 HR managers by career services firm Careerminds found 66.7 per cent of employers have frozen hiring, with entry-level positions hit hardest. The study, conducted in August, reveals 22.1 per cent of companies have stopped all recruitment while 44.6 per cent have limited freezes to specific departments.
The hiring slowdown coincides with what researchers call the “Great Stay” — a sharp reversal from the pandemic-era “Great Resignation.” U.S. Bureau of Labor Statistics data from June shows quit rates have fallen 33 per cent to 2.0 per cent, according to the company.
Budget constraints drive freeze decisions
Budget cuts motivate 59.6 per cent of companies to pause hiring, the survey found. Economic uncertainty and recession fears drive another 52.8 per cent of decisions to halt recruitment.
Artificial intelligence is also reshaping hiring practices, with 30.6 per cent of companies pausing recruitment because AI has eliminated the need for new roles entirely, according to Careerminds.
The U.S. labour market slowed sharply over the summer, with employers adding just 106,000 jobs from May to July — a 72 per cent decrease from the previous three months, according to Bureau of Labor Statistics data cited by the company.
Entry-level workers face toughest market
Among companies with partial hiring freezes, 36.1 per cent have paused all entry-level recruitment, the survey found. Entry-level hiring is down 23 per cent compared to pre-pandemic levels, according to LinkedIn data cited by Careerminds.
Technical and specialist positions remain least affected, with only 8.3 per cent of companies freezing these roles, according to the survey.
The hiring pause will last longer than many expect. Nearly half of companies (48.5 per cent) anticipate recruitment will remain frozen for 12 months, while 16.2 per cent don’t expect hiring to resume for two years, the survey found.
Companies turn to internal solutions
With external hiring limited, 43 per cent of HR managers are focusing on upskilling current employees for internal promotions, according to the research.
“We’re seeing a clear shift in how HR leaders are approaching talent needs,” said Raymond Lee, president of Careerminds. “Instead of defaulting to external hires, many are upskilling and reskilling their existing workforce.”
AI and technology skills top the upskilling priority list for 46 per cent of HR managers, while 35.5 per cent focus on leadership and people management capabilities, the survey found.
The shift reflects broader workforce changes as employees practice “job hugging” — holding onto current positions rather than pursuing new opportunities due to economic uncertainty and limited external hiring options, according to the company.
Studies show 82 per cent of managers step into leadership roles without formal training, according to research cited by Careerminds.
