The share of US workers making a direct transition from one employer to another has slid near a four-year low, according to the latest data from the Federal Reserve Bank of Philadelphia, pointing to a weakening labor market.
Workers who can transition directly from job to job without an intervening gap of unemployment typically include the most in-demand employees in the economy, and the Philly Fed says the extent of such switches is a key yardstick for measuring the labor market’s dynamism. Its gauge has been declining for two-and-a-half years, and is now around the lows hit in 2021 when the economy was reeling from the pandemic.
Millions of Americans move every month between employment and unemployment, or in and out of the labor force. Those who transition directly between jobs, whether they’re poached by recruiters or competing firms or simply seeking a better situation for themselves, are often able to command a higher salary when they switch. Research has shown that over the career life-cycle, the ability to make direct moves is a major source of earnings growth.
But the wage premium for job-switchers over those who stay put has been declining too, and in fact it’s now disappeared. Wage trackers published by the Atlanta Fed show that pay growth is now higher for the stayers than for the switchers, something that’s rarely been the case in the period since the Great Financial Crisis.
The research by the Philly Fed’s Shigeru Fujita, along with visiting scholars Giuseppe Moscarini of Yale University and Fabien Postel-Vinay of University College London, uses data from the monthly Current Population Survey to track employer-to-employer moves.
Higher readings on their gauge point to competition for talent, and it “tends to imply higher wage and productivity growth,” according to their website. A slowdown in employer-to-employer transitions with no intervening jobless spell is seen as an indication of worsening health in the labor market.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
More Global Markets Topics >
