Say Goodbye to Your Sign-On Bonus in 2023

You may not get a pile of cash thrown your way to accept a job next year.

If you work in the financial field, you may be familiar with the concept of the sign-on bonus. In a nutshell, it's a sum of money thrown your way in exchange for accepting a job.

Sign-on bonuses are common in the world of finance and banking. But for jobs that aren't as high-paying, they're generally not such a fixture.

In 2021, however, job listings offering a sign-on bonus increased by 454% across all industries, according to GlobalData. And the reason boils down to the difficulties companies have had in hiring.

But there's reason to believe hiring will slow down in 2023. And that could spell the end of sign-on bonuses -- and extra cash to stick in your bank account.

A nice perk

In 2021, GlobalData reported that companies were offering sign-on bonuses ranging from $150 to a whopping $100,000. But while higher-end bonuses might stick around in 2023, it's those lower-end bonuses that could go away as companies slow down on hiring and grow less desperate to fill open positions.

Why might hiring slow down? For months, economists have been sounding a warning about a potential recession.

The Federal Reserve has been implementing interest rate hikes in an effort to slow the pace of inflation. The logic is that by making it more expensive to borrow money, whether in the form of a credit card or personal loan, consumers are apt to start spending less. Once that happens, the gap between supply and demand should narrow, thereby leading to lower levels of inflation.

The Fed certainly has good intentions. But consumer spending may decline dramatically in response to higher borrowing rates. And that could, in turn, spark a recession.

Now this isn't to say that we're looking at a prolonged period of economic decline in 2023. Recessions can be mild, and given today's strong economy, it's fair to say that if a recession hits in the coming year, it won't necessarily be the worst one we've seen.

But still, some companies are already making plans to slow down on the hiring front in light of recession fears. And if companies aren't desperate to hire, they're not very likely to start throwing extra money at workers to come on board.

Make your own sign-on bonus

If you get a new job in 2023, it may not come with a sign-on bonus. But there are other steps you can take to eke out a pile of cash.

For one thing, you can get on a budget and seriously curb your spending for a few months to boost your savings. You can also try working a second job for a period of time to beef up your cash reserves.

Also, many people get a tax refund each year as a result of overpaying the IRS. If you've gotten a refund for the past number of years and your financial situation hasn't changed substantially this year, then there's a good chance you'll have that windfall to look forward to in 2023.

Of course, this doesn't mean you can't attempt to negotiate a sign-on bonus as part of your compensation package. If you're bringing special skills to the table, you might still manage to get some extra cash along with a new job, even if that practice becomes less popular.

But for the most part, we shouldn't expect sign-on bonuses to be as popular in 2023 as they were in 2021. And that's something job seekers will need to accept.