Fewer US workers switching jobs, here's why that could be a bad thing

Less Americans are moving within the U.S. – and that could be a negative indicator for workers in the labor market.

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A study from researchers Aspen Gorry, Devon Gorry, and Nicholas Trachter of the Richmond Federal Reserve Bank, found that interstate migrations declined in the three decades since 1980 primarily due to fewer workers moving from job to job (changing industry or changing occupation).

In fact, one report found that the rates at which employees quit their jobs and started new ones declined by as much as 38 percent over the past 20 years, which has generated high interest from experts since changing jobs is considered a key way to learn new skills and obtain higher salaries.

Changing jobs tends to be particularly valuable among young Americans – and the inability to do so could be costly.

According to researchers, about one-fifth of high school educated workers aged 18 to 28 switch between white- and blue-collar jobs each year, and some of these workers switch occupations more than once during those ten years. Only about 36 percent of these individuals do no switch occupations.

For the average 18 year-old, being able to switch between white- and blue-collar jobs was found to be worth an estimated 67 months of her best potential wage – that value falls to less than one month by age 49. The decline in value is attributed to the fact that workers learn more about themselves earlier in their career and older workers have less time to put knowledge to work.

Researchers found that workers who doubt they are in an occupation that they are best suited for are more likely to switch jobs – and are likely to do so again if they find themselves in the same position at a later time. They tend not be switching occupations to gain new skills, but rather to figure out where their skillset is the most productive.

But the study concluded that switching allows workers to find the right occupation earlier in life, which can lift earnings potential.

According to data from Deutsche Bank Global Research, there is a positive correlation between wages and median job tenure – meaning that workers in low-wage jobs change occupations more often. Those include industries like food preparation, as well as sales and office occupations.

On the flipside, workers in legal or management occupations tended to have a longer median tenure.

Wage increases have been sluggish despite a strong U.S. economy – in July, wages grew by 3.2 percent year over year, marking another reading of relatively slow growth.


Federal Reserve chair Jerome Powell said during recent congressional testimony that 3 percent wage growth “barely covers productivity increases and inflation,” noting that wages have not risen as quickly as they have in the past – particularly when the unemployment rate is hovering near multi-decade lows.