Many economists entered 2023 with an impending sense of doom: Recession felt inevitable amid sharply rising interest rates and accelerating layoffs. Despite moments when the U.S. economy appeared to tremble— through a short-lived banking crises, strikes and labor negotiations, fiscal brinkmanship, and escalating geopolitical conflict—doomsday kept getting punted to the future.
By most expectations, the United States is likely to finish 2023 having avoided an official recession (despite meaningful sector-specific and regional slowdowns)—due in large part to the remarkable resilience of the labor market and continued consumer spending. The worst of layoffs are likely behind us, and the consensus is for hiring to haltingly improve over 2024.
The world of work is normalizing as pandemic-era disruptions fade. For many workers, 2023 was a rude awakening: Talent may be talented, but precious few skills are irreplaceable. The frenetic pace of hiring and talent wars of 2021 and 2022 are past, and corporate leaders are doubling down on themes of prudence and productivity. Beyond a handful of growth niches like AI and green tech, leaders are thoroughly scrutinizing new and existing ventures.
Looking ahead, there are still real risks to the global economy—from ongoing conflict, to commodity prices amid volatile weather patterns, and still-too-high inflationary pressures. With a renewed focus on cost structures across the corporate world, fractures are building beneath the surface of the workplace—even if they are not quite yet visible.
The coming year will test the robustness of workplace institutions. As stakeholder demands on businesses grow—from employees, from customers, and from investors—companies could increasingly gravitate toward cultural poles—a clash of workplace civilizations, to borrow from a popular turn-of-the-millenium narrative.
There is light ahead, but we are not quite out of the woods yet. Here are eight workplace trends expected in 2024 based on Glassdoor data.
Gen Z overtake boomers
Despite a softening labor market, Gen Z is poised to overtake baby boomers in the full-time workforce by early 2024—a shift that has been long coming. Gen Z, or zoomers, have been seen as kids, but they are increasingly coming of age and making up an important share of the American workforce. (This shift occurred in early 2023 if part-time workers are included. Full-time is defined as working 35 or more hours per week.)
Boomers were the largest generation in the full-time workforce from the late 1970s until late 2011. Gen X had a brief period of generational workforce dominance from 2012 to 2018, when millennials overtook them. Millennials and Gen X still outnumber Gen Z, and millennials are poised to dominate the workforce for many years to come. By our estimates, Gen Z won’t outnumber millennials in the workforce until sometime in the early 2040s.
The coming year will still represent a pivotal moment of cultural change that U.S. companies cannot ignore as Gen Z workers—who care deeply about community connections, about having their voices heard in the workplace, about transparent and responsive leadership, and about diversity and inclusion—make up a rapidly growing share of the workforce.
Wages increase, benefits erode
Conventional economics suggests that wages and salaries almost never decline in dollar terms for individuals who stay in the same job at the same company because most people have such a strong aversion to seeing smaller paychecks hit their bank account. Data suggest that only about 7 percent to 8 percent of workers who stay in their same job at the same employer in a typical year see their salary decline on an annual basis. In 2023, it’s tracking a touch higher at 10 percent, but employers looking to cut costs have more levers beyond salary.
While there may be an aversion to downward adjustment for wages and salaries, we know that during soft labor markets there are other dimensions of total compensation that commonly decline. These include hours worked (for non-salaried workers), equity and incentive-based compensation, and the company-contribution to the cost burden of benefits like health insurance or retirement plans. (Salaries may also decline when workers switch jobs, particularly if the change is involuntary.)
There is some evidence that benefits access has started to erode, a trend that could accelerate in 2024. Data suggest that the shares of employees with access to 401k plans, dental insurance, tuition assistance, commuter assistance, gym memberships and mobile phone discounts has declined, and the share reporting access to vision insurance has stagnated. These declines, for the most part, have been more pronounced in industries that experienced turmoil in 2023, such as tech and finance.
There are a small number of benefits that continued to rise in 2023: fertility assistance, adoption assistance, parental leave and mental healthcare. During the tight jobs markets of 2021 and 2022, there was a widespread effort to make working more accessible for parents, or perhaps to attract millennials on the cusp of their prime family-formation years. That tide could ebb—or even turn—in 2024 as labor is more available, and companies scrutinize costs and identify the benefits that are most (and least) important to their employees.
Equity compensation decline as competition for skilled workers cools
Equity compensation can be a powerful and attractive way for workers to share in the success of their company, but workers also have less visibility into how their equity compensation compares historically or against their peers, giving employers a lever to control costs in a slower labor market. Nowhere is this clearer than in the tech industry where equity compensation has long been a central pillar of total compensation packages.
Entry-level equity compensation in the tech industry could decline for a second consecutive year in dollar terms. This means that the typical entry-level equity grant in tech will have been effectively flat in dollar terms since 2015, and down by roughly 30 percent in inflation-adjusted terms. (Inflation adjusted using the Bureau of Labor Statistics, Consumer Price Index for June of each corresponding year.)
Equity grants for more experienced tech workers are also likely to decline in nominal terms. Since they increased much more sharply over the past decade, they are still net positive after inflation.
In 2015, the typical equity compensation for more experienced tech employees was about 50 percent more than for early career tech employees; in 2023 the gap is closer to 90 percent.
The amounts reflect grant values. Real erosion of grant values mattered less when stock markets were booming since employees would see their account balances increase.
As the stock market stagnates and the values of privately held companies decline—as they have historically during periods of rising or high interest rates—many early career employees will feel like their total compensation is falling due to the declining value of their equity compensation portfolios. There is likely to be a renewed appetite for pay transparency beyond salaries and wages, which is uniquely complex for financial assets like stocks and options.
It’s clear that the late-2010s tech heyday is over. Looking past the mid-pandemic anomaly, it has been over for some time for early career workers.
Even if the broader labor market remains resilient in 2024, something has shifted in the way tech talent is compensated. Tech could lose its luster for workers relative to other industries with more conventional—and stable—compensation philosophies.
Tough 2023 decisions echo in employee morale well into 2024
Employers who undertook layoffs in 2023 have seen sharp drops in employee satisfaction. But perhaps surprisingly, these effects are still ongoing even many months after the layoffs took place. Glassdoor ratings continue to stagnate if not deteriorate even up to 180 days after the layoffs in 2022 and 2023.
In the 30 days following a layoff, employers’ overall rating drops 4 percent on average to 3.49 from 3.66. Additionally, overall ratings stay that low, even 180 days after the layoffs. These rating declines in the month after a layoff are most severe for senior management (-8 percent) and CEO approval (-16 percentage points) where employees are upset at leaders about the layoffs and their assessments change little in the 6 months that follow a layoff.
Similarly, career opportunities (-6 percent) and business outlook (-13 percentage points) fall sharply as workers worry about their future prospects, while measures like culture and values (-4 percent), diversity and inclusion (-3 percent) and work-life balance (-1 percent) see smaller immediate drops.
For most of these dimensions, ratings stabilize after the initial drop, but ratings for culture and values and work-life balance continue to decline another 3 and 4 percent respectively during the 150 days following the initial 30-day drop. While the impact on culture and work-life balance may not be immediately felt after a layoff, there can be an ongoing impact from longer-term burnout, weaker employee culture and persistent employee disengagement.
Middle managers feel the squeeze from above and below
The middle seat is often the most uncomfortable, particularly during moments of turbulence. Amid cost cutting, layoffs, RTO and organizational flattening, things got uncomfortable for middle managers at large companies during the second half of 2023.
They suddenly became the enforcers of sometimes unpopular corporate policies and the scapegoat for organizational bloat, while having to simultaneously ask more of their thinly stretched frontline teams.
The stress is showing in their job satisfaction: While work-life balance ratings were stable for more senior and more junior employees, there has been a sharp drop in ratings among middle managers at large companies.
There is little on the horizon to suggest that this trend will abate or reverse in 2024. There is risk here for companies.
Middle managers are often skilled operators that navigate the murky decisions between high-level business priorities and brass tacks technical implementation. Derided as management bloat in some recent corporate announcements, they can and frequently do provide an essential function in large, complex organizations.
Some middle managers will rethink their career paths and opt out toward individual contributor roles, but the corporate middle seat is unlikely to become any more comfortable.
Top talent, unspoken workplace social codes become more important
Companies seeking to attract workers back to the office focused on a combination of carrots (e.g., in-office meals, events) and sticks (e.g., penalties for noncompliance) in 2023. The push started out with a focus on carrots, but evolved toward more sticks as the labor market softened over the course of the year.
In 2024, companies are poised to navigate an increasingly perilous knife’s edge between prudent cost management and alienating valuable employees amid a surprisingly resilient job market. As a result, we expect more carrot sticks—policies somewhere in between to gently reward and enforce RTO.
What do carrot sticks look like? Often they are the flexible or unspoken rules of corporate culture that are rarely codified or uniformly enforced. Think of activities like face-to-face peer mentoring, recognition for voluntary participation in social activities, and empowering managers to have greater discretion in advancement or compensation.
Even now, companies have still not figured out how to find the perfect balance of the benefits of in-person work with the desires of their workforces. In 2024, employers will continue experimenting with the right strategy for work arrangements as they settle on a new normal.
Less rigid remote work policies draw workers toward smaller companies
Despite generally lower salaries and less expansive benefits, mid-sized and small companies long distinguished themselves in competitive talent markets by offering something that large companies could not: Tight-knit workplace communities and flexible work arrangements. That changed with the pandemic when, suddenly, everyone was flexible.
The tides began to reverse again in 2023. Companies—most visibly, the largest corporate titans—retrenched on office-based face-time driven by the conviction that remote workers are less productive.
A poll of the communities on Glassdoor in June 2023 indicated workers were not happy with return-to-office mandates, with 54 percent of professionals saying they are not comfortable with their company implementing a hybrid work policy. Additionally, both access to and satisfaction with work-from-home benefits have fallen in 2023 for the largest companies while continuing to rise for small- to medium-sized businesses. Remote jobs have become much scarcer, but they have hardly disappeared. They continue to thrive at mid-sized and small companies.
In 2024, flexibility will be a key factor in draw talent away from large companies.
Can I just talk to a person?
The proliferation of Generative AI will make it easier to access information and increase productivity for some workers in the long-term, but they will also increase the premium on human peer-to-peer interaction.
The large-scale, commercial application of generative AI and large language models are marvels of scientific achievement. While they’re very likely to enhance long-term productivity, the impacts on labor productivity are unlikely to be immediately visible in official statistics.
In the interim, there are also risks that—like many new technologies—they could exacerbate the social isolation that has become endemic across American society and the workplace.
Similar earlier waves of technological innovation have reduced prices for goods and services while also expanding potential demand – for example, textiles in the wake of the industrial revolution and transportation with the advent of the automotive era. But there is also an associated increase in the premium on human labor, or in this case, the premium on human interaction.
As anyone who has been stymied on an endless loop with automated customer service call lines can attest, even when automation provides highly accurate information there is no substitute for the connection with another human being.
See the graphic version of this article in the November December 2023 flip book version.
