FRBSF Economic Letter
2007-13; June 1, 2007
Anxious Workers
In recent years, the U.S. economy has expanded at a healthy
pace, employment has grown substantially, and the unemployment
rate has dropped to very low levels. Despite these favorable
trends, some recent news stories have emphasized worker
anxiety and uncertainty about their job stability and security,
reinvigorating a theme that gained substantial prominence
in the mid-1990s. Research economists who have investigated
this topic in general have not subscribed to the view that
rising worker anxiety reflects widespread, long-term changes
in labor market conditions; rather, some have argued that
claims of declining job stability are exaggerated (e.g.,
Stevens 2005), perhaps due to changes in employment conditions
for small, high-profile groups, such as skilled white-collar
workers.
In this Economic Letter, I explore trends in job stability
and job loss and their consequences over the past two
to three decades. The findings reported shed light on why
some worker groups might have reason to feel anxious.
Declining job stability
 The most obvious and most commonly used measure of job
stability and security is job tenure, essentially the length
of time that a particular job lasts. Since
1983, the U.S. Bureau of Labor Statistics (BLS) has periodically published
tabulations of years of tenure for wage and salary workers
overall and by age and sex. Figure
1 displays selected results from the two most recent BLS tenure releases (U.S.
BLS 2006; data back to 1983 are in the 2004 release), specifically, the median
(midpoint) of the distribution of years of tenure reported for all respondents
in the group. Tenure is measured at the time of the survey (January or February
for each labeled year) and as such represents an "interrupted" measure
of job duration that is shorter than the length of a typical completed job. Nevertheless,
trends in this measure are likely to mirror trends based on estimates of completed
job duration. Figure 1 shows that overall tenure increases a bit between 1983
and 2006, suggesting that job stability rose during this period. By sex, tenure
was unchanged for men and rose noticeably for women.
Examining median tenure for the entire male and female
workforces is a fundamentally flawed basis for making inferences
regarding changing job stability, however,
because it ignores the significant aging of the U.S. workforce that occurred
over this period. As the BLS notes, population aging tends to increase measured
tenure for the workforce as a whole, because young workers have not worked
long enough to acquire much tenure, and typical career
paths entail job shopping early
on and more durable job matches later. For example, in 1983, median tenure
for men aged 25-34 was 3.2 years, while it was 15.3 years
for men aged 55 to 64.
 A more careful examination of job stability is enabled
by the BLS breakdown of
median tenure for 16 groupings by sex and detailed age groups. Within these
groups, median job tenure was flat or down since 1983 in
all but two cases: women aged
35-44 and women aged 45-54, for whom median tenure rose about six months; by
contrast, job tenure fell substantially for men in those same age groups (Figure
2). Job tenure also fell substantially for men aged 55-64, and it fell slightly
for men aged 25-34. In percentage terms, median tenure fell about 30% for men
aged 35-44 and 37 to 38% for men aged 45-64 (e.g., median tenure fell from
12.8 to 8.1 years for men aged 45-54, which is a 37% decline
from the 1983 value).
These declines in stability apply to a substantial share of the labor force:
for example, men aged 35-64 accounted for nearly one-third of all employed
individuals in 2006.
These figures on job tenure by age indicate that declining
job stability is obscured by the changing composition of
the workforce. The substantial decline in male
job stability implied by the age group-specific figures cited here is largely
confirmed by Farber (2007) using more elaborate statistical methods. His findings
partly conflict with Stevens (2005), who found only a slight decline in the
duration of longest jobs held by older male workers in
various surveys conducted between
1980 and 2002 (preceded by an increase between 1969 and 1980). However, because
Stevens's sample is limited to individuals aged 58-62 at the time of each survey,
she excludes individuals born after 1944. As such, she ignores changes in job
stability experienced by these more recent birth cohorts (including individuals
up to age 61 in 2006).
The conflict between the sharp decline in male job stability
and the slight increase in female job stability among workers
aged 35-54 raises the important distinction
between voluntary and involuntary job transitions. This distinction is obscured
by data on job tenure, since changes in tenure can arise due to changes in
either type of transition. In particular, rising tenure
for women aged 35-54 is unsurprising,
given the rising labor force attachment of women of prime child-rearing ages
over this period, and it likely reflects voluntary behavior on their part (i.e.,
less frequent labor market withdrawal during child-rearing years). By contrast,
declining job tenure for men of a similar age is unlikely to reflect a desire
for shorter jobs but instead may reflect increasing incidence of involuntary
job loss.
Job loss and job security
Data on involuntary job loss are available from the BLS
Displaced Worker Survey (DWS), conducted every other year
since 1984. This survey provides information
on workers who involuntarily and permanently lost a job during the three years
preceding the survey for such reasons as plant closures, slack work, or elimination
of a position or shift. Farber (2005) analyzed results from every DWS survey
through 2004 using consistent methods and found that, measured as a share of
employment, the displacement rate in the 2004 survey (years 2001-2003) was
almost as high as it was in the 1984 survey, despite a
much lower unemployment rate
in the later period. This indicates that permanent job loss has become a more
important feature of the economy over the past few decades, relative to general
labor market conditions as reflected in the unemployment rate. Moreover, Farber
found that the upsurge in displacement during 2001-2003 was especially notable
for the most highly educated workers, for whom rising anxiety has been a subject
of recent news stories.
The DWS is a somewhat restricted sample, focusing on
a subset of unemployed workers who lost jobs for particular
reasons. Broader analysis also has been done, however.
Using data from the monthly CPS surveys, which provide information on a representative
sample of all unemployed individuals, Valletta (2005) uncovered a trend towards
a rising share of involuntary job losers among the newly unemployed during
the years 1976-2004. The implied increase in the importance
of permanent job loss
could be expected to contribute to workers' sense of insecurity over this period.
Important additional information regarding job security
can be obtained through analysis of the pattern of job
loss across worker groups. Valletta (1999) found
that rising involuntary job loss was most pronounced for workers with substantial
job seniority (based on data from the mid-1970s through the early 1990s). Job
security is an important and valued job characteristic for these workers, as
reflected in their relatively durable job attachments up to the point of involuntary
separation. Increases in job loss for such workers likely contributed importantly
to declining job stability and security over the sample frame in Figures 1
and 2 (at least through the early 1990s).
Increasingly severe consequences
The consequences of job loss also may contribute to worker
anxiety. The primary consequence is lost earnings, an important
component of which is the direct losses
incurred during the period of time spent unemployed. Valletta (2005) found
that unemployment durations have been rising over the past
few decades, particularly
for involuntary job losers, indicating that the direct earnings losses associated
with job loss probably are rising as well.
 Reduced earnings in jobs obtained following involuntary
unemployment spells arguably are even more important than
the direct earnings losses incurred during unemployment,
since the indirect impact of job loss on earnings may be long lasting. Farber
(2005) provided a detailed analysis of earnings losses in post-displacement
jobs,
using the DWS and a sophisticated statistical technique designed to isolate
earnings losses due to displacement per se, uncontaminated
by systematic differences in
the characteristics of displaced and non-displaced workers. Figure 3 displays
a selected subset of his findings. The decline in earnings due to displacement
was about 17% on average for workers displaced during 2001-2003 (2004 survey),
which represents an increase from losses of about 9 to 14% during comparable
periods around past recessions (1981-1983 and 1991-1993). The figure also shows
that the recent surge in post-displacement earnings losses was most pronounced
for highly educated individuals, whose typical earnings loss was about 21%
during the 2001-2003 period.
The consequences of job loss go beyond reduced earnings.
In the United States, workers who lose jobs often lose
health insurance coverage for extended periods,
and workers with unstable job histories often find it difficult to accumulate
adequate funds for retirement. Such losses reinforce the earnings losses associated
with job instability and could be expected to deepen worker anxiety.
Discussion
The substantial declines in job stability for prime-age
men documented here, in conjunction with the high rates
of permanent job loss (relative to the unemployment
rate) and large associated earnings losses found in other research, lend credence
to the view that worker anxiety about job stability and security is real rather
than illusory. At the same time, the burden of job loss and its consequences,
most notably earnings losses, has shifted towards groups like the highly educated
that may be especially visible in media coverage of labor market trends. Overall,
the findings discussed here suggest that observable changes in labor market
outcomes in the U.S. may have contributed to anxiety, at
least for some groups of workers. Rob Valletta
Research Advisor
References
[URLs accessed May 2007.]
Farber, Henry S. 2005. "What Do We Know about Job
Loss in the United States? Evidence from the Displaced
Workers Survey, 1984-2004." FRB
Chicago Economic Perspectives 29(2), pp. 13-28.
Farber, Henry S. 2007. "Is the Company Man an Anachronism?
Trends in Long-Term Employment in the U.S., 1973-2006." Working
Paper, Princeton University (February 27). Stevens, Ann Huff. 2005. "The More Things Change,
the More They Stay the Same: Trends in Long-Term Employment
in the United States, 1969-2002." NBER Working
Paper 11878 (December).
U.S. Bureau of Labor Statistics. 2006. "Employee
Tenure in 2006." USDL News Release 06-1563 (September
8).
(2004
release).
Valletta,
Robert G. 1999. "Declining Job Security." Journal
of Labor Economics 17(4, part 2), pp. S170-S197. Valletta, Robert G. 2005. "Rising Unemployment Duration
in the United States: Causes and Consequences." Manuscript,
FRBSF.
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