Is Employee Job Tenure Really Shortening? (Yes, It Is)

Catherine Rampell, writing in the Washington Post, says churn in companies is down:

The share of people getting laid off each month — as well as, more disturbingly, the shares getting hired and quitting their jobs — is near record lows. That’s according to Labor Department data released this weekand calculations from John Haltiwanger, an economist at the University of Maryland. Haltiwanger estimates that private-sector layoffs, hires and resignations are 21 percent to 26 percent below their rates two decades ago.

But is it true? It seems counterintuitive. The new Five Thirty Eight helpfully digs into the tenure data:

The median “tenure” of a worker — how long the typical worker has been with the same employer — rose by 14 percent between 1983 and 2006, to four years from 3.5. When the recession hit, the trend accelerated, with median tenure hitting 4.4 years in 2010 and 4.6 years in 2012. As counterintuitive narratives go, it would be hard to beat, “Job security continues to rise.” …

But when you look closer, it becomes clear that this counterintuitive narrative is counterintuitive for a reason. The Labor Department’s data on tenure look only at people who are employed. That means that if a large number of recent hires lose their jobs at once — as tends to happen when a recession hits — median tenure will rise, even though people aren’t staying in their jobs for longer.

The prerecession trend of increased tenure turns out to be equally misleading in a different way. There are two major forces at work. The first is age: Older workers are more likely to have been in their jobs for longer, so the gradual aging of the U.S. population has pushed up workers’ average tenure. The second is the entrance of women into the workforce and, particularly, into career-track jobs. In 1983, the average woman had been with her employer a year less than the average man; 30 years later, their average tenures are nearly equal. If we set aside those factors and focus just on men in their prime working years, there was a decline in tenure in the years before the recession. This is one case where conventional wisdom holds up.

Of course, the correct, conventional wisdom of shortening employee tenure is even more apparent when you’re looking at high skilled workers in dynamic industries.

3 comments on “Is Employee Job Tenure Really Shortening? (Yes, It Is)
  • Five Thirty Eight is always excellent at finding answers deep inside the data. Very interesting insight.

  • I’m pretty sure that at salary rates between $50k – $150k, the data will show more of these folks working for big organizations, and staying there longer.

    The “special knowledge” that office-knowledge workers gain with experience in one company is not very transferable to other companies. This leads to job insecurity, and an ability of the company to push these workers for longer hours, and adding work (in the private, peaceful sector).

    Those at or above the range who choose to be independent contractors, or freelancers, will have lower tenure.

    One of the unmeasured unknowns is the number of employed folks were work as pure employees, vs the number who freelance/ temps. As that number drifts up, the “tenure” measure will drift down, even tho the real tenure for “normal workers” is going up.

  • I appreciate the arguments in your piece that indeed illustrate that tenure data has it’s nuance. Yes, the data reports only the employed, so mass layoffs skew towards longer tenures. Yes, an ageing population also shifts tenure distribution towards the longer side.

    But since 2010 US businesses have been rehiring aggressively, meaning that we should now see the opposite trend (people rehired since 2010 have tenures of less than 7 years by definition) . But the BLS recently (late 2017) reported job tenures are down only marginally ( 3 years after this blog was posted).

    The narrative that we have shifted radically from job-to-life to a hire-and-fire-at-will environment are unfounded, and the argument that the gig economy will make us all free agents does not stand – at least for now.

    Given the choice, most workers would still rather be employees enjoying a good degree of job security and benefits. These are important considerations for entrepreneurs and business leaders.

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