The Promotion Freeze: Why Raises and Upward Mobility Are Slowing Across America

Over the past year, a significant shift has emerged in the U.S. labor market: promotions are stalling, raises are cooling, and career trajectories are flattening. Known as the “promotion freeze” or “promotion recession,” this trend affects workers across industries and experience levels. The reasons range from economic caution and shifts in employer strategy to demographic changes and technological disruptions. Here’s an in-depth look at what’s behind it, how far-reaching its effects are, and what it means for workers navigating their careers in 2025.

1. The Data: Promotions, Raises, and Job Mobility

Sharp Drop in Promotions

According to payroll provider Gusto, the rate of jobholders receiving promotions—defined as a title bump and a pay increase of at least 5%—peaked at 14.5% in mid‑2022, but has tumbled to just over 10% in mid‑202. Among small- and mid-size firms, this slowdown is especially notable in sectors like technology, where promotion rates dropped from 17.4% to around 10%.

Meanwhile, Bloomberg/ADP data show only 1.3% of white-collar workers received promotions in Q1 2024, the lowest rate seen in five years. A Korn Ferry study similarly highlighted that only 1 in 10 employees received a promotion in 2024—a striking 23% decline from 2022.

Wage Growth Slows Alongside

Recent Indeed data confirm a slowdown in wages: advertised pay raises dropped from 9.5% in 2021 to just 3% by April 2025. Meanwhile, BLS figures show real average hourly earnings increased by only 1.4% year-over-year—modest, but positive.

Pay Bumps No Longer Tied to Switching

Historically, job-hopping guaranteed higher starting salaries—but now, median raises for job switchers (4.2%) trail stayers (4.4%) as of early 2025. This marks the first sustained period since the Great Recession where staying put outweighs switching financially.

2. Why Are Promotions Being Delayed?

Economic Uncertainty & Employer Caution

As Forbes and industry analysts note, companies cautious about future revenue are pulling back on merit increases and promotions. Textio suggests economic slowdowns prompt budget cuts, and promotions are often among the first aspects of compensation to hit the brakes.

Workforce Metrics and Hierarchy Management

A “promotion freeze” tactic is sometimes used to restructure internal hierarchies, freeze wage budgets, or delay costly payroll inflation. Federal agencies, for example, often freeze promotions to stabilize budgets—though private firms use them too to manage headcount and pay scales.

Shift in Bargaining Power

Employers have regained leverage. Job postings and hiring rates have cooled 10% below 2022 peaks, reducing negotiating power for candidates. Reduced turnover also makes firms feel less pressure to reward staff just to retain them.

3. The Human Impact: Morale, Mobility, and Mental Health

Morale Slips & Disengagement

Unmet promotion expectations lead to frustration. Textio notes that promotion freezes can dent motivation, loyalty, and productivity—“driving on the highway and hitting a wall” Korn Ferry warns talent departure rates may rise if internal mobility stalls.

Delayed Career Progression

Entry- to mid-level employees face longer waits for role advancement, job title upgrades, and skill growth. Those remaining stagnant may feel trapped in roles without growth or pathway.

Hardest Hit: Younger Generations

Gen Z—new to the workforce and hopeful for upward mobility—now face limited promotion opportunities and slower wage growth. Early-career delays could have long-term earnings effects.

4. Who’s Being Affected Most?

Tech & White-Collar Workers

These fast-paced roles saw the sharpest declines: tech promotion rates dropped from 17.4% to 10% in three years. Industries with slower wage growth (e.g., retail, hospitality) are also slowing raises.

Health & Skilled Trades Sustain Growth

Not all sectors are equally affected. Healthcare occupations remain tight, with moderate raises and needed skills boosting bargaining power. Meanwhile, blue-collar wages increased 1.7% above inflation in the first half of 2025.

Government & Public Sector

Bureaucratic pay structures delay promotions and hires. The federal government frequently opts for reassignments rather than formal promotions to manage structures .

5. Structural Implications for the Workforce

Wage Compression & Inequality

With both wage and promotions tightened at the top, and smaller raises overall, wage compression occurs—where senior and junior workers see similar pay leading to dissatisfaction among experienced staff .

Stalled Socioeconomic Mobility

Brookings data show upward mobility is lower in stagnating sectors. Promotion freezes deepen inequality and hinder social mobility.

6. Employer & Policy Responses

6.1 Creative Promotion Alternatives

Some firms provide lateral development—expanded responsibilities, special project roles, and stretch assignments—even when formal promotions are off the table.

6.2 Transparency & Clear Career Ladders

Leaders can maintain trust by sharing promotional criteria and timelines—even if raises are delayed .

6.3 Non-Financial Rewards

Perks like extra PTO, flexible schedules, training stipends, and performance bonuses can sustain morale during pay freezes.

6.4 Upskilling & Mentorship Investments

Rather than promotions, firms can offer “stretch assignments” or coaching. HBR advocates for leaders to proactively identify and promote talent outside standard cycles.

6.5 Policy Levers

Policies supporting wage growth—like higher minimum wage, tax credits for retention, and sector-specific apprenticeship growth—can indirectly pressure firms to re-evaluate pay structures.

7. What Individuals Can Do

• Document Achievements: Keep a record of accomplishments, metrics, and responsibilities to support promotion cases.
  
• Ask About Development Plans: Request clarity on skills gaps holding back promotion.
  
• See Alternatives: Pursue lateral moves or certification courses to remain valuable.
  
• Plan for the Long Game: Accept that career paths may flatten temporarily—but big shifts are cyclical; historically mobility recovers post-recession.
  

FAQs

9. Bigger Picture: Long-Term Effects

Risk: Talent Loss & Engagement Dip

Stagnation risks drive-performers to competitors. Korn Ferry warns of talent flight, and morale dips can cost companies up to 34% in productivity.

Opportunity: The Talent Market Cycles

Labor market power rotates: employers gain ground during caution, workers regain when competition rebounds. Understanding cycles helps guide career moves.

Policy Opportunity Windows

Now may be the moment to advocate for structural change—minimum wage, inclusive pay, re-skilling—all needed to sustain equitable mobility in future surges.

Final Take

The current “promotion recession” reflects broader shifts in economy, labor supply, and corporate caution. While it’s a challenging phase for workers, it’s temporary—and companies can mitigate impact by innovating promotion models, enhancing transparency, and investing in careers—while workers can pivot their mindset toward resilience and learning.

Stay agile, build skills, and remember: economic cycles change—so can your career trajectory.

For more insights on labor trends, pay equity, and career mobility, visit WhatJobs News.