Americans who switched jobs during the pandemic did so for better salaries, benefits, and work-life balance.
Many may have also traded in their job security.
Nearly 40% of working Americans changed jobs sometime over the past two years, according to a recent poll by Marist, with many taking advantage of the pandemic’s hot labor market to search for better wages and perks.
But with fears mounting about an impending recession in the U.S., workers who switched jobs during the so-called Great Resignation are aware that they may not be able to hold onto them.
Nearly 40% of American workers overall are concerned about their job security, according to a new analysis from financial service company Bankrate. But workers who recently changed jobs are twice as likely to be worried about being unemployed in the near future than those who did not change jobs.
Their fears might not be unfounded. The Fed is trying to slow down the economy with a historic series of interest rate hikes, and more than half of U.S. CEOs are considering layoffs within the next six months.
A recession trade-off
Low pay was the leading reason Americans decided to switch jobs last year, with nearly two-thirds of workers who changed jobs doing so in pursuit of higher wages.
Many Americans were able to find exactly that, with a recent Pew survey finding that as many as 60% of workers who changed employers in the past year saw their earnings rise, a welcome bit of good news as rising inflation has sent prices for food, fuel, and housing soaring this year.
But the labor market can be fickle. Today’s unemployment rate is 3.5%, a 50-year low, as a tight job market continues to dominate the labor picture. That could change quickly, however, with the Federal Reserve raising borrowing rates to their highest level in more than a decade to fight inflation, and bankers and economists warning that a severe economic slowdown in the next year is virtually set in stone.
The Fed is doing its best to engineer a “soft landing” for the economy, wherein inflation subsides without a significant increase in unemployment. But some observers are warning that may no longer be an achievable target as inflation persists, even after several interest rate hikes. Earlier this month, former Treasury Secretary Larry Summers warned that the U.S. is unlikely to reduce inflation without “a recession of a magnitude that would take unemployment toward the 6% range.”
The Great Resignation has a ‘double-edged sword’
If unemployment does rise to those levels, newer hires might feel they’re the most at risk for layoffs, according to Bankrate.
Nearly 60% of American workers who switched employers to a higher-paying job say they’re concerned about their job security, the survey found, with 19% saying they are “very worried.” Meanwhile, only 28% of employees who did not change employers and got a pay raise instead say their job security is at risk.
Bankrate found that job switchers received the biggest wage increases over the past year, but noted that this could be a “double-edged sword” if an employer decides to go ahead with layoffs.
“Employees do often become more valuable the longer they stay at the company, and if you’re going to cut someone, you’d rather cut someone who hasn’t accumulated all the firm-specific knowledge,” Julia Pollak, chief economist at online job marketplace ZipRecruiter, told Bankrate.
Bankrate found that employees who get laid off have been at a company an average of 1.2 years, while workers tend to stay at a company for 2.5 years on average, citing data from workforce analytics firm Revelio Labs.
While newer hires might be at greater risk, not all companies are expected to resort to layoffs during a recession. Tech companies including Netflix, Meta, and Snapchat parent Snap have been hit hard by this year’s market downturn and have already turned to layoffs and hiring freezes, but many other companies have employed different means to reduce expenses in preparation for a recession, including cutting back on marketing budgets and reducing business travel.
“Some companies do take the last-one, first-out approach, but it’s definitely not the rule across the economy,” Pollak said.
