Looking back at the state of the labor market in 2018, the U.S. workforce experienced historic gains. Unemployment fell to a near 50-year low, more than two million jobs were added, and wage growth began to accelerate. As employers look ahead to 2019, retaining their skilled talent in this labor market should be of critical importance. But who are the job switchers?
Many call it a millennial trend, but job hopping for career advancement is quite common across all age groups. According to our latest Workforce Vitality Report, switchers in 2018 included those aged 16-24 (34.6 percent), 25-34 (23.7 percent), 35-54 (18.1 percent), and 55 and above (12.3 percent).
Job switching was most prevalent in the West (8.6 percent), followed by the Northeast (5.8 percent). However, switching in the South and Midwest was relatively slower at 3.5 percent and 2.1 percent, respectively.
While the rate of people switching jobs has slowed slightly, wage growth for switchers has steadily increased (4.8 percent in 2018). This wage growth is consistent with a tightening labor market, demonstrating that employers are striving to retain talent.
Workers Are Leaving Small Biz for Larger Companies
Small business hiring has begun to slow while large business hiring has picked up, according to our National Employment Report. In September of 2018, large businesses added 75,000 jobs, compared to small businesses with an increase of 56,000. In October of 2018, the gap widened even more as large businesses increased with an added 102,000 jobs and small businesses increased with 29,000 jobs.
Why the shift? Large businesses often have greater flexibility in their budgets to provide stronger wage increases and more robust benefits. The data shows that employment growth has decelerated rapidly at businesses with fewer than 50 employees, and these small firms are facing higher turnover rates as workers are increasingly finding better opportunities at larger firms.
Additionally, job holders at small firms are seeing wages rise by 4.3 percent on an annual basis compared with growth in excess of five percent at larger companies. Entrants into small firms are also facing slower wage growth, which makes it more difficult to attract new workers.
Can Perks Help Business Owners Keep Their Employees?
Although money is still a primary motivator for job seekers, workers also express the desire for attractive benefits and perks.
New reports have shown that some job switchers are open to a larger set of benefits than a direct wage increase. Some of these new benefits include extra time off for a wedding, money to put toward adopting a new pet, help to pay off student loans, and flexible work from home schedules. A recent article from Fit Small Business described the coolest new company perks to watch for in 2019 as ranging from “Pawternity” to Egg Freezing and Fertility Treatments. Money isn’t everything — and offering more robust benefits can help to lure job seekers on the prowl.
Looking back on the dynamics of the U.S. labor market in 2018, it is apparent that employers will likely be hard-pressed to attract and engage the skilled workers they need in 2019. Talent retention is critical, and business leaders should prepare to offer the best salary, benefits, and other perks they can.