Are Your Employees Walking Out The Door?
The market for employee talent is getting more competitive. The latest indicator: There was a marked increase in the number of American workers who voluntarily quit their jobs last December, according to the Bureau of Labor Statistics.
The “quit rate” – the percentage of workers in the private sector who left their jobs voluntarily reached 2.9 million in December 2015 – the latest data available. That’s the highest number we’ve seen since before the Great Recession.
Meanwhile, the ratio of unemployed-per- job-opening has fallen drastically over the past several years. When the last recession began in 2007, the ratio was 1.8 to one. That is, for every job opening reported, there were 1.4 unemployed workers available to fill it.
As the recession took hold, the number of job openings plummeted as the ranks of the unemployed soared, and the ratio reached a high of 6.8 unemployed per job opening in July of 2009. Since then, the ratio has fallen consistently. today, there are 1.4 unemployed workers per job opening. That means that the job market by this metric, too, has fallen to pre-recession levels.
The combination of the two metrics indicates that workers have much more ‘walk-away’ power than they did six or seven years ago. During the height of the recession, quit rates went way down as workers had no confidence that they could find another job in a reasonable amount of time.
Today, the most talented workers are quitting because they have other jobs waiting for them.
Furthermore, the official unemployment rate has dropped below 5 percent for the first time since February 2008. That was eight years ago. Most of a decade.
Is It Time To Beef Up Your Benefits?
Clearly, now is the time for employers serious about retaining their best workers to take a good look at beefing up employee compensation, both in terms of cash compensation (salary, wages, bonuses and commissions) and non-cash compensation.
Other employers certainly are. Over the last two months of 2015, wages grew by 3 percent, on a seasonally adjusted basis.
On the downside, these recent wage gains are uneven. Dan Alpert, an investment banker and author of The Age of Oversupply points out that the wage gains are overwhelmingly going to management and supervisory-level workers – and are possibly partially attributable to year-end bonuses. Among hourly and rank-and-file, non-supervisory workers, wage gains were just 0.28 percent, or less than a tenth of those that went to managers.
#BLS 1/2 Hourly wages: While headline is up 0.48%, the increase for production and non-supervisory workers (85% of total) up only 0.28% M/M
— Dan Alpert (@DanielAlpert) February 5, 2016
Moreover, the labor force participation rate remains lower than it was a year ago, bouncing around the lowest it’s been since the 1970s. This indicates that the improvements in the unemployment rate are not yet reaching the ranks of discouraged workers and long-term unemployed individuals whose unemployment benefits have run out.
Nevertheless, recent events are good news for workers overall – and they’re a wakeup call to human resource professionals who should be getting busy updating their research on industry compensation data and coming up with creative ways to improve their employer’s overall compensation package and value proposition for employees.