Job-Hopping: The New American Way?

American economists are optimistic of late. Median employee tenure has fallen in recent years. In common terms this means that American workers are switching jobs more often, or “job-hopping”

According to data released by the Bureau of Labor Statistics, the median employee tenure for men declined from 4.7 years in January 2014 to 4.3 years in January 2016 . Median tenure for women also declined across this same period. On average, the economy has seen a decline in median employee tenure for both sexes across all age groups from 2014 to  2016. 

In terms of age, median employee tenure was higher among older workers. The median tenure of workers ages 60 to 64 was 10 years with their current employer in January 2016, compared with only 5 years of employees ages 30 to 34. Employees, particularly younger employees, switch jobs often in order to find the right fit for their skills. And on an economy-wide basis, higher levels of turnover helps match the best companies with the best workers. As a result we see an improvement in overall economic productivity.


Does education level play a significant role? It is postulated that workers with lower education levels have a tendency to switch jobs more often due to their lack of permanent, professional skills. According to the same data released by the Bureau of Labor Statistics, for members of both sexes aged 25, workers with less than a high school diploma had lower median employee tenure in January 2016 than those with higher levels of education. Workers with at least a college degree had median tenure of 5.2 years for men and 5.1 years for women. This is consistent with the postulation; however, we see a decline in the median tenure across different educational cohorts as reaffirming that there is an additional factor at work in the job market.


Even for economists the cause of declining median employee tenure is puzzling. The Labor Department has cited economic growth as a catalyst for falling median tenure. The reason being: during periods of economic expansion, more job opportunities become available. As a result, new entrants gain employment opportunities and experienced workers gain opportunities to change employers to assume better jobs. Another explanation could be a fall in the occurrence of layoffs on the parts of employers. Regardless of the specific cause, this decline excites economists and instills them with hope for a more efficient American economy.
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http://www.federalreserve.gov/newsevents/speech/yellen20160606a.htm
Anna Graff

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