The economy would be more dynamic if workers just learned to walk away from their employers.
I recently caught up with a friend who has been working at the same company for more than a decade and was content enough. Other companies might pay more, make him feel more valued and offer room for advancement, but he didn’t pay much attention to his growing dissatisfaction and lack of forward trajectory because his sales job meant he was on the road a lot and liked his clients and colleagues, as well as the nice hotels and fancy meals. The pandemic took away all those perks and he had to face what the job wasn’t offering. Now my friend is considering quitting -- and he should. American have a history of not changing jobs often enough, to the detriment of the economy.
Although the quit rate normally varies with the state of the labor market, rising when it is tighter and there are lots of jobs around, the overall trend has been lower since the 1980s. The reasons are not well understood. Some economists suspect it is due to the growing power of employers or maybe the increasing prevalence of non-compete agreements. But these can’t explain why job switching has fallen across all skill and income levels, and even in industries with competitive labor markets. Maybe the reason has to do with how employer-provided benefits have become a bigger part of overall compensation. Economists have speculated that the lack of job changes is a big reason why wages haven’t gone up much since the 1980s.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
This piece originally appeared in Bloomberg Opinion