As workers grow more confident in this strong economy, the war for talent wages on in surprising ways.
May 2018’s historically low 3.8% unemployment rate increased to a still-low 4.0%. But for the 6.1 million Americans who were jobless in May, about 1 in 7 of those were voluntarily unemployed, and looking for another job – the highest rate of “voluntary unemployment” in more than 17 years.
In fact, in the first quarter of 2017, 4% of workers changed jobs, the highest rate since 2001. The cycle of voluntary unemployment with the intent of changing jobs will continue to define the war for talent. In April 2018, 3.4 million Americans quit their jobs, double the number that were fired.
As you might have guessed, most folks aren’t changing jobs for the prospect of new happy hour buddies. They’re anticipating more money. According to the Federal Reserve Bank of Atlanta, job-switchers saw around 30% larger annual pay increases in May than those who stayed in the same job over the past 12 months.
Breaking out of the Minimum World
Millennials lead the charge on job switching – 6.5% of workers under 35 changed jobs in the first quarter of 2018, compared to 3.1% of workers ages 35 to 54. As Erika McEntarfer at the U.S. Census Bureau observes, job hopping has allowed younger people to land opportunities in higher-paying industries, and increases their propensity for upward mobility.
In industries where the labor drought is especially bad - such as construction, manufacturing, or health care - organizations can benefit from hiring inexperienced workers in low-paying jobs in hospitality or retail, for example.
Of course, this has created challenges for plenty of organizations. While the cost of turnover is generally very expensive, managers and HR professionals have to know when to appeal to current employees and when it’s not worth the battle. Robert Maynard of Famous Toastery, for instance, says it’s not necessarily worth giving employees halfway out the door a $3/hour raise, but it is worth meeting with folks to discuss career opportunities at the restaurant chain.
While workers are certainly motivated by salary increases and growth opportunities, organizations must consider their full compensation offering and added perks. Remote work opportunities offering increased work/life flexibility are also adding fuel to the fire.
Soft benefits are especially appealing to younger segment of the workforce. Plentiful company holidays, personal, sick days, and paid time off are a sure fire way to send the message that you value an employee’s well-being outside the office. In addition, tuition assistance or reimbursement, housing assistance, and paid-family leave can keep employees around over time. And, no young Jedi minds some extra fodder, like free breakfast on Mondays and craft beers on Fridays!
We’ll continue to monitor workforce trends in this hot-blooded economy – and what it means for your organization. It’s never been more important to make sure you’re paying equitably to ensure you’re fully equipped to recruit the best talent available.
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