In a sluggish employment market, employee morale 'is suffering'

Worker Morale Hits New Lows Amid Stagnant Job Market

Employee confidence has taken a downturn, according to ADP, a private payroll company. Their research highlights a persistent six-month stretch of declining sentiment, coinciding with a sluggish employment landscape.

Mary Hayes, who leads people and performance at ADP Research, explained, "Limited job prospects are weighing heavily on employees. With few alternatives available, many feel compelled to remain in their current roles, which is negatively impacting their outlook."

Employee Motivation Index Drops to New Lows

ADP’s Employee Motivation and Commitment Index, which compiles data from monthly surveys of 2,500 working adults in the US since 2022, dropped to 131 in February—a four-point decrease and the lowest reading since May 2025.

The report found that workers at large organizations, especially those with over 5,000 staff, were particularly discouraged. This trend comes as major employers like Amazon, UPS, and Target have recently announced layoffs.

Quits Rate Remains Low

ADP’s findings align with the government’s “quits” rate—a key indicator of worker confidence in voluntarily leaving jobs. In December, this rate remained around 2%, well below the 3% peak seen during the “Great Resignation” in March 2022. Certain industries, such as manufacturing, finance, and federal government, saw even lower rates. All three sectors reduced their workforce in 2025.

ADP’s Employee Motivation and Commitment Index fell to 131 in February, marking its lowest point since May 2025. (AP Photo/LM Otero) · ASSOCIATED PRESS

Sector-Specific Sentiment Shifts

In February, ADP observed a sharp 18-point drop in morale among manufacturing workers—the steepest decline among the ten sectors it monitors. Conversely, employees in professional, scientific, and technical services reported a six-point improvement in sentiment.

Job Openings and Worker Expectations

Hayes also pointed to a scarcity of job openings. Government figures from December revealed that available positions had fallen to their lowest since 2020. Although the unemployment rate remains historically low, many people feel stuck in a stagnant job market.

For several months, Americans’ confidence in quickly finding new employment after a job loss has hovered at or near record lows. This pessimism is especially pronounced among those earning under $50,000 annually and individuals with a high school diploma or less, according to New York Fed data.