Rodney Johnson | Tuesday, October 22, 2013 >>
When I was a newly minted grad and working for a brokerage firm, everyone knew there was only one good way to get a decent raise…
The logic went that your first employer, and maybe even your second, was more or less a training ground where you had the opportunity to prove your worth. As time went on you took your experience and leveraged it into a big, fat paycheck somewhere else.
From your first employer’s point of view, they trained you. Sure, they might not have increased your pay as your skills grew, but that was alright because they took the chance on hiring you.
In the end, while the first company might have loved you, they were not going to bump your salary enough to keep you.
But the logic of all of this assumed one big thing…
…that there was another job available.
We never stopped to consider what would happen if there simply weren’t any openings when shopping around to increase our income. Today, this is exactly what we find.
The Bureau of Labor Statistics (BLS) conducts a survey called Job Openings and Labor Turnover, or JOLT. This report shows the number of people quitting their jobs, the number of people fired, the number of people hired, and the total number of job openings. The intent is to get a deeper picture of the activity within the jobs market instead of simply totaling up the number of people working and not.
The BLS releases the report on a two-month lag so the latest data is from July. It shows that 2.3 million people voluntarily quit their jobs. That number, which is still more than 20% below the 2007 level, has remained steady for months. Layoffs have subsided, but job openings are not shooting higher.
If fewer people are quitting and there hasn’t been an increase in job openings, then clearly the labor market continues to offer very little opportunity to the unemployed or those new to the job market (recent graduates).
The unemployment report provides evidenced of this each month, showing that millions of Americans are still looking for work.
But this situation also reveals the dim reality for those who are employed. That is fewer of them have a chance of changing jobs.
Without this job mobility, or at least the threat of it, workers lose one of their main bargaining chips in negotiating pay and benefits. It’s no longer a given that competent employees can find work somewhere else and get a pay raise to boot. It is entirely possible that somewhere else just doesn’t exist today.
This lack of bargaining power leads to an obvious result: lower pay.
This doesn’t mean employers go around cutting everyone’s income, only that they’re not driven to give substantial pay raises to retain employees.
The BLS JOLT report confirms some of what we, here at Dent Research, have been discussing for a long time. That is employment trends continue to work against workers, and probably will continue to do so for the rest of this decade.
The slowdown in turnover, along with the glacial pace of job creation, illustrates a labor market that is basically stuck in the mud.
While this might sound a bit gloomy for those not so thrilled with their day jobs, there is an opportunity here.
Instead of searching for other jobs that might not exist, employees can focus on cross-training, increasing their education, or even preparing to start their own business. Each of these activities can put a worker in a much better position when the economy – and the labor market – finally head higher.
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