Job Disatisfaction, Quits:Openings (Q:O)

American workers are notoriously dissatisfied with their jobs when compared to their international peers. Part of the problem is compensation–if a fifth of people paid less than $50K a year “hate” their jobs, and median compensation is $34K (1), then high dissatisfaction is unavoidable. As Ross and Saturay showed, Dissatisfaction —> Disengagement —> Lower Productivity via net categorical behaviors. Translation: Happy, engaged employees come up with surprising ways to produce, while the dissatisfied ones come up with endless ways to goof off and/or sabotage the organization. This leads to gajillions of B2B services (20 in just one Google search), surveys, and good idea self-help articles on increasing employee engagement. (Personal opinion: The work time is a sunk cost, so getting the most out of it has to be a priority–being engaged is better than the alternative. Of course, that’s sometimes easier said than done.)

From a high altitude perspective America’s work culture has hinged on many dynamics, but I’ve only got time for two–

1. A person at any nearly any stage of life who wants to be self-sufficient can find work within a reasonable period.

2. If at any point you decide you hate your job/life/other you can just move on to other opportunities.

These reach back to the founding of the British and Spanish colonies–they were mainly comprised of people who needed work. It’s woven into our many waves of immigration, the Homestead acts, the post-WWII inclusive military, Pell Grants, student loans, and the community college system–even into abolition of slavery, and the ongoing extension of rights + opportunities to a growing citizenry. Is it possible that high rates of job dissatisfaction have been made viable in the US because markets and managers have been able to convince the truly ticked-off to move on? To greener pastures hopefully, but any pasture will do.

Here’s the problem though–people aren’t moving on these last few years, satisfied or not. Workers, even the dissatisfied workers, seem to have sunk their teeth into any job they’ve got and they’re not letting go. It seems to me that if workers aren’t getting paid particularly well, and many are burnt out on their work, they ought to be willing to quit if there are openings. So I mmmbopped over to JOLTS at the BLS and pulled the openings and quits. In an amazing mathematical feat known as division, I calculated and graphed the ratio of Quits to Job Openings (Q:O ratio). First the monthly data:

Quits to Openings Monthly Ratio calculated from JOLTS data

Quits to Openings Monthly Ratio calculated from JOLTS data — Click to View Full Size

The BLS’s treasure chest only goes back to 12/2000, but there’s definitely a trend of declining Q:O. To the extent Q:O is a proxy for occupational mobility it matches with the academic research. Here’s what the annual averages show:

Q to O Annual Averages Calculated from JOLTS Data

Q to O Annual Averages Calculated from JOLTS Data

Two notes on the annual average trends: First, the ratio increases during recessions. This is because the number of job openings (denominator) declines more than quits (numerator). Example: Job openings in 01/09 were down 38.0% from openings in 01/07. Quits were down by 33.5% in the same period. Second, the ratio trended down in the ’02 to ’07 recovery. The downward trend during the ’09 to ’12 recovery accelerated to 1.71 times that. I partly attribute this to worker anxiety about the overall job market. It’s also due to high selectivity in screening and hiring processes. The slight increase in the 2013 data is due to rise in both the number of job openings and the number of quits. In short: an improvement.

Something to keep in mind about job satisfaction–it’s not just about money or attitude. It’s about circumstances and ambition as well. Many workers are bored in their current careers and would like to try other things. For example, I know a few engineers who would like to move into more creative work or teaching. I know people who are in very demanding jobs and would like to have a family, and need to change their careers in order to do it. Life changes, needs change, and people need markets that allow them to adapt.

This brings me to the problem–America is in a very unusual labor market, where there are very few entry level positions in nearly every industry. It’s hurting many workers who are currently employed, whether they are dissatisfied or just having to put up with the dissatisfied. It’s hurting young people very badly, and the long-term unemployed even worse. And yes, it’s hurting employers as well.

But here’s what I’m getting at–this cannot go on forever. It flies in the face American culture, so it will be fixed. It’s started to improve already, and I bet this will accelerate over the next two years. If it doesn’t occur by “natural means”, I’m sure it will come in the form of a political solution. What do you think?

(1) Assumed total compensation = (net compensation)/0.8

Krokodil was a Russian satirical magazine that ran from 1922 to 2006. A 1952 cover:

Krokodil 1952 Issue 27 Cover

Krokodil 1952 Issue 27 Cover


About Cameron Hoppe

Posted on November 21, 2013, in Economics, Jobs, JOLTS, Recession and tagged , , , . Bookmark the permalink. Leave a comment.

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