Sarah Foster | Bankrate.com (TNS)
For more than a year now, workers have been told to strap in for a recession that could zap their historic career opportunities, harm their unprecedented amount of bargaining power and injure their job security.
That downturn has yet to arrive. Now, workers may be learning to live with the uncertainty.
One in 3 (or 33%) employed Americans are worried about their job security, according to Bankrate’s job seeker survey released in April. But a new analysis shows they’re also the ones most likely to make career moves.
Nearly 9 in 10 workers who are worried about their job security (or 88%) say they will likely take at least one career action in the next 12 months, which includes quitting a job, asking for a raise, relocating for a job, negotiating for more flexibility and searching for a new position, the survey found. About two-thirds (or 67%) of those with no job security worries said the same.
Illustrating the divide even more, 21% of workers who are worried about their job security say they’re likely to take all of those actions, more than five times higher than workers who are not worried (at 4%), the survey found.
It’s not what you’d expect from an economy on shaky ground.
Job openings have dropped 16% since the Federal Reserve started raising rates to slow the economy, Labor Department data shows, while job cuts in April were nearly three times higher than a year ago, according to data from Challenger, Gray and Christmas. The share of workers voluntarily quitting their jobs has also dropped rapidly to near pre-pandemic levels after soaring to record highs in early 2022. Employed workers’ confidence that they’ll be able to find a new job is beginning to slip, too, Indeed data shows.
Highlighting the slowdown, one of the nation’s top economists — ADP’s Nela Richardson — is predicting “The Big Quit” of 2022 will evolve into “The Big Stay” in 2023.
But economists say worried workers’ willingness to stay on the prowl for better opportunities is a side effect of a job market that’s remained more resilient than anyone ever expected. Never knowing when the “last call” to job hop or negotiate may officially arrive, workers are fighting through recession fears and taking action.
Which came first: The job security worries or the career action?
Worried workers aren’t just planning to take career action. Many of them already have.
Of the Americans who are worried about the security of their jobs, about 1 in 4 got a new job (at 27%), asked for more flexibility (at 25%) and requested a raise (at 24%) in the past year, Bankrate’s poll found. Another 16% quit a job.
Across the board, they were more likely to take career action in the past than those who reported having no worries about their job security. Nearly 1 in 5 secure workers got a new job (at 19%), asked for a raise (at 18%) and inquired about more work flexibility (at 17%). Just 7% reported quitting a job.
Past experiences could also be what’s causing the anxiety. Nearly 14% of worried workers were laid off in the past 12 months, versus 3% of those who aren’t feeling worried about their positions, Bankrate’s poll found.
Yet, those laid off workers are still speaking up in the workplace. Bankrate’s survey finds they were more likely than those who didn’t face a lay off to ask for a raise or more flexibility over the past 12 months. Another 12% of laid off workers said they relocated for a job, versus 5% of those who didn’t face job loss.
“Can you have a recession without having a downturn in the labor market? That’s at the heart of this,” says Cory Stahle, economist at the Indeed Hiring Lab. “By and large, the labor market is still good, and workers still have a lot of bargaining power. It’s an element of workers saying, ‘Hey, I can use the bargaining power I still have right now to go out and advocate for those things.’”
This worker didn’t let a layoff stop her from relocating for work and beginning a new job
Sarah Woodard, 35, was laid off from her tech job on Jan. 10. Seven applications and four months later, she was uprooting from her home of 13 years in New York City for a new opportunity in Los Angeles.
“I didn’t necessarily want to move, but knowing that the job market was hard, it did allow me to be very open to the idea of relocating,” she says.
The role ended up being a step up in her career, Woodard says, but the process wasn’t without tribulations. Her main worries were whether she’d have to take a step back or accept a lower compensation, especially after working hard to negotiate throughout her career.
“It just hurt so much because it wasn’t my choice,” she says of her layoff. “Every day, I was doing all of the job searching and was totally optimistic and knew it was going to work out, and by 5 p.m, I would sit on the couch and be exhausted and have a little cry.”
Her first job offer at the end of February — the only opportunity she felt appropriately qualified for in New York — would’ve required a 71% cut in on-target total compensation. Another offered half as much.
She took a leap of faith and declined both opportunities, accepting that it might mean moving. In the meantime, a severance package and an emergency fund bridged her finances through the bout of joblessness.
The process worked out: By March 21, Woodard had signed the offer letter for her newest role.
She’s determined not to let fears of another layoff keep her from negotiating or advocating for herself as much as she’s done in the past. She’s also focusing on speaking at all-hands meetings and communicating the value of her job with other people, rather than worrying about her own job security.
“I have a broken brain that’s always eternally optimistic. When things are bad, you just move forward and do the best that you can,” Woodard says. “I am not going to put my mental energy toward worrying about something I can’t control. I’m going to be making sure I am the absolute best at what I do.”
Workers are taking advantage of the strong job market while they can
Even as the once-scorching labor market begins to cool, employers still have more than 10.1 million jobs open as of April, outnumbering the number of unemployed workers by almost 1.8-to-1, according to data from the Department of Labor. That’s higher than at any point before the pandemic.
Meanwhile, unemployment has remarkably held near half-century lows despite the drop off in job openings. Layoffs haven’t begun infecting industries other than technology and information services, and new applications for unemployment insurance have remained low and stable.
“Employees know the labor market is still really tight,” says Ryan Sweet, chief economist at Oxford Economics. “Those getting laid off are getting re-employed so quickly they don’t need to file for unemployment insurance.”
Sweet’s team at Oxford is projecting a 5.3% unemployment rate by early 2024, a more than 1 percentage point increase from the current 3.7% level. Joblessness hasn’t increased that much without a recession, but it would still be the lowest unemployment rate associated with any modern downturn. Unemployment hit 14.7% during the pandemic, 10% in the aftermath of the Great Recession and 6.3% amid the dotcom boom and bust in the early 2000s.
“This could be a jobless recession in the sense that we don’t see a lot of job losses, just given how much businesses are hoarding labor and how much concern there is around labor supply,” Sweet says.
Service-sector jobs such as food and restaurants, as well as leisure and hospitality, are grappling with the biggest labor shortages, according to a U.S. Chamber of Commerce analysis of Labor Department data. Experts say companies may also be scarred by post-pandemic labor shortages, opting to hoard labor instead of lay workers off.
Workers may also be enticed to take career steps to set themselves up for success ahead of the next recession. A promotion could give workers more valuable experience for their next job search, while higher pay could help put them on stronger footing ahead of any downturn.
In records dating back to 1998, job switchers have reaped greater pay gains than those who’ve stayed in their positions, according to the Atlanta Fed’s wage-growth tracker.
“Even if they did lose their job, they could be in a better bargaining position, but also in the meantime, they get the benefits of what they bargained for until they lose the job, too,” says Erica Groshen, senior economics advisor at the Cornell University School of Industrial and Labor Relations and a former commissioner of the U.S. Bureau of Labor Statistics. “People who lose their jobs involuntarily can do worse than what they left, but there is a tale of them that do better.”
Workers from tougher economies most likely to take career action
Another indication that economic worries aren’t keeping workers from negotiating or job-switching: The workers living in the “most miserable” economies at the time of polling — defined as those with the highest sum of unemployment plus inflation — were the ones most likely to take actions that could further their careers.
At 14%, individuals in the West and Northeast were the most likely to take every career step between now and March 2024, from asking for a raise and more flexibility to quitting a job and searching for a new position, Bankrate’s poll found. Those workers were living in regions where combined joblessness and inflation rates topped 10%, Department of Labor data from February data shows.
Meanwhile, just 8% of those living in the South and 5% for those living in the Midwest said they were likely to take all of those career steps coming up. The South faced a slightly lower so-called “misery rate” of 9.7% in the month, while the Midwest faced a 9.1% level.
Inflation could be a major reason Americans are still taking career action, especially because they’ve had to make major financial sacrifices to make ends meet. More than two-thirds (68%) are saving less for emergencies because of the rapid run-up in prices, while nearly half of Americans with credit card debt (or 48%) added more to their balances because of those price pressures.
“Having this situation where you still have some bargaining power and a lot of jobs out there, workers are saying, ‘I need to use that to go out and seek a way to offset what’s going on with inflation,’” Stahle says.
Recession fears couldn’t stop this Oregon resident from quitting her job
Eight months ago, Melissa Zehner of Eugene, Oregon, assumed the economy was in a recession. That didn’t stop her from quitting her job after seven months in the role — and deciding to start her own content strategy business.
Slammed with an overwhelming number of tasks, Zehner recalled often being unable to get away from her desk for lunch or take breaks between meetings. She worked 80 hours of overtime in the month that she quit her job, she says.
I was bound by golden handcuffs. It was the most money I’ve ever made, the most prestigious job I’ve ever had and I hated every minute of it.
Eugene, Oregon, resident
Before the pandemic, Zehner never envisioned she’d be the type of person to choose happiness over job security. She recalls sometimes living in hotels throughout her childhood, with her family often not knowing where their next meal would come from.
“A lot of my identity has been tied up in my career as a consequence of that,” she says. “I put work above everything else in my life for most of my life because I needed the security.”
Then she quarantined with her dog during the outbreak, going without “a hug from another human” for five months. She feared a return-to-office may risk her life. The experience was groundbreaking, she says.
“I think I learned the hard way that I need to build a job around my life rather than build my life around my job,” she says.
She left her job on a Friday in October and made a LinkedIn post the following Monday about her decision to instead work for herself. Six months later, she’d build up enough clients to fully replace the salary she left behind.
She says the work-life balance has her happier than ever. She can tell the difference even in her health.
Zehner’s story reflects another reason why job seekers may keep negotiating, even in a recession: In the aftermath of the devastating coronavirus pandemic, workers are changing how they think about their jobs.
She also isn’t alone. Workers in the West said work-life balance factors were the biggest priority in their employment moving forward (at 32%), even more important than higher pay (at 26%).
“I dash over to the computer when I wake up in the morning because I’m excited about the work I’m doing,” she says. “I find it interesting and challenging, and there’s no dragging my feet. That tells me I’m on the right path.”
5 steps to make sure a recession doesn’t interrupt your career goals
A strong job market coupled with the most anticipated recession in recent memory mean workers could face one of the strangest environments of their careers yet — one where recession worries and hopes of finding a new, better position actually end up existing simultaneously.
Remember: Companies still hire and workers still job-hop, even in the toughest of job markets. The shifting and uncertain economic environment underscores the importance of still taking steps to better your career — but doing it in the most strategic way possible.
“Top talent, those top performers — they will always be able to find another job or be recruited, whether we are in a recession or not,” says Jessica Kriegel, chief scientist of workplace culture for Culture Partners. “The best advice any job seeker could receive is to not trust the headlines and to rather look at your own circumstances.”
Here’s five steps you can take to further your income and your career, even in the toughest job markets.
1. Prioritize your own personal finances to give you the financial security to take risks
The biggest cause for anxiety among workers might not be the job loss itself but what they would do to make ends meet if their primary income source disappeared. A separate survey from Bankrate published in February found that 68% of people are worried they wouldn’t be able to cover their living expenses for just one month if they lost their primary source of income. Inflation has made it even harder to trim back on expenses and save for the unexpected.
A healthy cushion of cash and other resources, such as unemployment benefits, can help you avoid turning to high-cost credit card debt, should you face unemployment. It’s also a path to flexibility, allowing you to be pickier about waiting for the right job for your skill sets and career goals.
Even those who haven’t lost their jobs might be more inclined to take a risk and hop to a new job that excites them, knowing they have an emergency fund.
The median amount of time a job seeker remains unemployed is 8.6 weeks, according to data from the Department of Labor. Yet, that can last longer in tougher labor markets. During the Great Recession of 2007-2009, the median worker was jobless for 17.2 weeks. Should your job hunt last longer than you expected, consider building a budget around a reduced income, so you can stretch your savings as long as possible.
“The inevitable ebbs and flows of expansions and contractions and the flow of our individual lives all dictate that we prioritize emergency savings to prepare for the possibility of job loss and disruption of income,” Hamrick says. “This isn’t something that should be episodic, but part of a disciplined approach to our personal finances along with other goals including paying down/off debt and saving for retirement.”
2. Stay up to date on your skills and certifications, and know what value it is that you bring
Companies often pivot to new projects or initiatives during recessions. It all means tougher economies make for an important time to think about what skills you bring to the table — and also how your skill sets are evolving to accommodate the ever-changing industry you may work in.
Consider if there are any free courses or tutorials that you can take to build up your knowledge of a new software or program specific to your field. Meanwhile, keep track of all the projects you’ve worked on and know how you’ve specifically brought value to your own role and company.
“Your career is important to you, but fulfilling the business’s goals is important to the business,” says Marlo Lyons, a California-based certified career coach and author. “You have to marry the two, and you marry the two by figuring out what skills and capabilities bring more value. It does not mean working harder. Working more hours does not get you promoted.”
3. Focus on building your network
Down times in the economy make for an important time to pad up your professional network — and reach out to contacts you might’ve lost touch with.
Workers may be able to find out about job opportunities that haven’t yet been posted online. Meanwhile, if one of their contacts refers them for a new role, their resume might stand out amongst others already in the pile.
4. Do careful research about potential new employers you’re interested in working for
Workers should not necessarily bar themselves from job hopping when the job market is unstable, especially if they have skills that are in demand. But before you consider pursuing a career at a different company, make sure you’ve done your research. Look into whether they’ve had previous rounds of layoffs and how they’ve implemented them, which could be a case of a “company that is not planning well, and is not thinking about itself long term,” Lyons says.
“The first step for anybody going to jump jobs is to ask yourself, ‘Why do you want to leave?’” she adds. “Understand what’s important before you jump jobs, or you’re just going to jump from one bad job to another.”
5. A recession doesn’t have to stop you from negotiating or job hunting — but know when to bring those goals up
Just because there’s a recession, doesn’t mean the job market is devoid of opportunities for you. Kriegel, for example, got her “first real corporate job” in October 2008, at the height of the Great Recession.
“Companies were shutting down left and right,” she says. “Probably because of the nature of the economy and the headlines, it made me advocate for myself even more.”
Making a case for a promotion during a recession also isn’t impossible, but it might be harder at a company that has already carried out a round of layoffs.
“If you’re ringing that bell too loudly, you might be one of those people” who gets cut in another layoff round, Lyons says. “If you’re going to make a case for a promotion or raise, don’t talk about what you’ve done but be focused on how your scope has changed.”
And even big tech players who’ve laid workers off — from Microsoft to Meta — have job openings as they double down in new initiatives and business bets that have caused them to need new resources again.
“A company wants to hire the right person based on the skills and capabilities that are needed for the job and the value that the right person can bring,” Lyons adds. “You may be the right person. The economy should not stop somebody from looking for a job just because they feel a recession is coming.”
©2023 Bankrate.com. Distributed by Tribune Content Agency, LLC.
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