In the latest release of its Employee Retention Index, Eagle Hill Consulting reports a surprising paradox: even as overall retention sentiment ticks upward, workers’ confidence in the external job market is hitting historic lows.
The Employee Retention Index climbed modestly by 0.4 points to 102.9, suggesting employees are increasingly likely to stay in their current roles over the next six months. But that bump comes with a sharp caveat—the Market Opportunity Indicator, which tracks how workers perceive external job prospects, plunged 4.4 points, the steepest drop since Eagle Hill launched the index in 2023.
At its lowest recorded level, this data point underscores a broad, potentially troubling message: Americans feel stuck—not necessarily satisfied, just resigned to staying put.
“This isn’t just statistical noise,” said Melissa Jezior, CEO of Eagle Hill Consulting. “It’s a clear signal that confidence in the job market is eroding across nearly all demographics. For employers, that’s a double-edged sword.”
The New Reality: Retention by Default, Not by Design
The drop in external job confidence follows broader economic signals, including the U.S. Bureau of Labor Statistics (BLS) June jobs report, which found:
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Private sector job growth hit a post-2024 low
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Nearly half of all private industries cut jobs
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State and local government hiring drove nearly 50% of new job gains
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Hires declined from 5.61M in April to 5.5M in May
In other words, while the U.S. labor market hasn’t collapsed, cracks are forming—especially in the private sector. Workers are taking note, and many appear to be opting for stability over aspiration.
But this shouldn’t lull HR leaders into complacency.
Inside the Index: Compensation Up, Culture Still Lags
Eagle Hill’s Retention Index tracks four core drivers of employee sentiment: Organizational Confidence, Culture, Compensation, and Job Market Opportunity. Here’s where each stands as of Q1 2025:
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Compensation Indicator:
Up 1.1 points to 103.4. It’s the only indicator to improve this quarter. Gen Z holds the most favorable views here, while Baby Boomers show steep dissatisfaction, down 22.4 points YoY. -
Organizational Confidence:
Dropped 1.1 points to 101.5. Gen Z and men are most optimistic; Gen X is the most skeptical of their organization’s future. -
Culture Indicator:
Down 0.7 points to 100.7, making it the weakest of the internal indicators. Women and Gen Z reported the least satisfaction—a signal that workplace belonging and recognition still need attention. -
Job Market Opportunity:
The biggest story this quarter. Down 4.4 points, now the lowest-ranking factor influencing employee retention for the first time since the index launched.
Gen Z: Calm on the Surface, Cracks Beneath
Gen Z employees present a fascinating contradiction. They appear most likely to stay in their roles over the next six months. But don’t misread that as engagement—they’re not exactly thrilled.
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Gen Z’s Retention Index dropped more sharply than any other generation.
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Their Organizational Confidence indicator plummeted 10.4 points, more than double the decline seen in older cohorts.
While Gen Z feels secure and fairly paid, they’re disengaging quietly. For HR teams, that’s a clear red flag for latent attrition risk, especially if the job market rebounds in late 2025 or early 2026.
A Window of Opportunity—or Complacency?
For employers, the current retention landscape offers a strategic opening—but only if they don’t confuse stagnation with satisfaction.
“Workers may not be jumping ship right now,” Jezior noted, “but they are watching, waiting—and increasingly disengaged. Smart organizations will use this time to double down on development, engagement, and internal mobility.”
That means:
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Rethinking training and upskilling, especially for Gen Z
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Addressing culture gaps and recognition inequities
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Being proactive before external market conditions shift
The risk isn’t that employees will leave in droves tomorrow—it’s that when they do, companies won’t see it coming.
