Why job switchers are the real winners in the labor market
Yahoo Finance’s Denitsa Tsekova breaks down wage growth amid the pandemic for those who switched jobs vs. those who remained with their employers.
Video Transcript
- Welcome back. Let's bring in our personal finance reporter Denitsa Tsekova now to discuss how workers who switch jobs are actually the real winners in this labor market. Denitsa, great to have you with us. Tell us what you mean by that.
DENITSA TSEKOVA: Well, what I mean by that in terms of paycheck, workers who switch jobs maybe a year earlier are now getting much better paychecks than those who stuck with their old jobs. So the rate we see is 5.8%. This is year over year.
So from last June, the workers had left their jobs. They're seeing a big increase in their paycheck. Job holders are also seeing an increase in their paycheck. But it's much smaller. Nearly half of those who switch jobs are seeing.
This is based on ADP data. ADP has payroll data of 18 million employees. Overall, wage growth a 2.3%, , which is a little bit slower than Q1. But still it's so negative.
What we're seeing is that in order to attract employees in this job market, where job openings have been very high, levels have been very high, employers seem to be offering more competitive compensation benefits trying to really attract those workers. But when we go back to the industries of this is a very uneven story, leisure and hospitality, which is the industry hit the hardest by the pandemic is actually seeing the highest job switching rate. But yet they're experiencing the smallest wage growth.
Wow. When we go to industries that were affected as hard by the pandemic like information finance. We are seeing some of the biggest wage gains where those job switchers and those industries. It's important to say that across the country, it's also an even northeast and the west are seeing the biggest wage growth.
The Midwest are tracking behind. They're seeing much more wage growth. And going back to the quiz rate being the highest in April. Very elevated in May, as well as the job openings being an historic high. What we hear from ADP is this trend may continue and more workers may switch jobs and indeed, see a higher return if they make that decision to find a new job.
- So I want to ask you, Denitsa, I believe even you and I have talked about this. And you've brought us some data on how more and more workers. And of course, you just mentioned that quits rate.
DENITSA TSEKOVA: more and more workers are willing to leave their jobs. I believe it was about a third of workers surveyed in one of the studies that I had been reading. About a third of the workers are willing to leave their current place of employment.
Are we at all hearing or are you at all seeing that out there that employers are willing to pay higher salaries to really keep some of their employees at least happy and working in the company to prevent turnover in the office?
DENITSA TSEKOVA: Exactly. We're seeing that third of employees are thinking of this. And we actually see that a 10% increase will make a really big part of those employees stay of their current job. But seeing the trade, maybe we're not seeing that type of initiative offers from employees from employers.
And obviously, as we see the wage growth being higher for job switchers, maybe there is a bigger pain initiative for workers to actually get another job right now rather than negotiate higher pay at their current. Or at least that's what we're seeing at the moment.
- All right. We're going to have to leave that there. Denitsa Tsekova, thank you so much for breaking all of that down. And of course, you can read Denise's reporting on our website YahooFinance.com.
