Why Australians Are Locked Into Jobs and Suburbs

Job switching in Australia has fallen to its lowest level on record. In the year to February 2025, just 7.7% of workers changed jobs – roughly one in 13 people. That compares with nearly one in five in 1989. Self-employment has dropped to a 20-year low. Interstate moves have slowed. The data point to a workforce that is increasingly risk-averse and locked into place.

Business strategist Kate McCready described the mood: “I do think there's a lot of fear in the workplace at the moment.” She cited advances in artificial intelligence, a tightening jobs market, and global uncertainty as factors. McCready recently returned to self-employment after a restructure at a large health insurer made her redundant.

The Job Mobility Tailspin

The simple read is that fewer Australians are switching roles. The better read is that the incentives to stay put have grown stronger. Rachel Lee, research economist at the e61 Institute, said: “All of these factors point towards Australians being stuck or being held in the jobs that they currently have.”

Housing as a Golden Handcuff

The cost of housing plays a central role. The average mortgage sits at around $700,000 over a 30-year term. That kind of commitment discourages workers from risking a job change or relocation. Lee noted that the benefits of wage employment have expanded over time: “With the expansion of things like superannuation and paid parental leave, the benefits of being a wage employee have increased.” Wage jobs now offer income security and predictable benefits that self-employment cannot match.

Self-Employment at a 20-Year Low

The share of self-employed Australians fell from a 2002 peak of 20% to just 14% today. Sole traders dropped from 12% in 2002 to under 9% now. Lee said the shift is not due to a lack of entrepreneurial desire. Workers are instead choosing wage-paying jobs for greater income security. She added: “Fewer people are running small businesses, as wage jobs become more attractive and predictable, while the costs and complexities of setting up a business that hires and manages employees have risen.”

The Regulatory Wet Burlap

Economist Dimitri Burshtein of Eminence Advisory pointed to regulation as a key barrier. He described new rules as “like a wet burlap sack” because they disproportionately burden new entrants while protecting established companies. “It just stifles innovation, it stifles movement. What it's designed for is to de-risk systems. And what that means is that we're using regulation to protect what we have, to make it really hard to build things new,” Burshtein said. High income tax rates and compliance costs further discourage younger people from starting businesses.

Interstate Migration: Same State, Same Story

Property market expert Cameron Kusher sees a parallel trend in geographic mobility. “There is just not enough enticement to encourage people to cross the borders. People are still moving, they are much less likely to move to another state instead choosing to move within the state they currently live in,” he said. Transaction costs like stamp duty and high housing prices in rising interest rate environments create friction.

The Housing Tax Distortion

Kusher tied the mobility slump directly to housing: “High housing costs, especially in a rising interest rate environment, is a big reason why people don't change jobs, don't start business and don't move to another state.” The federal budget has taken aim at tax breaks that fuel the market, such as negative gearing and the capital gains discount. If price growth slows, it could become easier for people to save a deposit and buy. Whether those measures are enough remains an open question.

The Self-Employment Calculus

McCready now coaches people making the leap from wage earning to self-employment. She offered a list of trade-offs she says many weigh:

Pros: independence, uncapped earning potential, autonomy, ability to fit work around life

Cons: paying your own superannuation, missing team camaraderie, being more susceptible to economic conditions

Underprepared for the Next Shock

Australia has experienced only two recessions in the past 40 years – the early 1990s downturn and the 2020 COVID recession. McCready worries that the current mindset leaves workers unprepared for possible upheaval: “It's easy to do good work and do interesting things and so (people are) kind of underprepared for even the thinking that's required in terms of: 'Oh I might need to do something a bit different' or 'I might need to look at my career'.” Rising economic instability overseas, wars, and supply chain disruptions add to the uncertainty.

What This Means for Economic Dynamism

The three trends – low job mobility, falling self-employment, and reduced interstate migration – compound each other. A workforce that stays in place dampens productivity growth, slows the reallocation of labor to more productive uses, and reduces churn that drives wage bargaining. The federal budget's housing measures and regulatory reforms are the next decision point. If they fail to shift the incentives, the lock-in effect could persist for years. McCready summed up the challenge: “Right now we're in this situation where everything is changing. The economy is crazy, what's happening overseas, wars, we see all of a sudden the impact that fuel not coming in has on all these different things.” Reversing the trend will require changes that address the risk calculus at the heart of Australian economic life.