Paul Davidson, USA TODAY
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America’s workers are on the move.
Now that the low unemployment rate is giving workers more leverage than they’ve had in years, a large number are either job hopping or on the lookout for new opportunities.
About 27% of employees switched jobs in the 12 months ending in the first quarter, according to payroll processor ADP, the most since the firm began tracking the figure in 2014. Three years ago, about 23% of workers left one job for another during the prior year. ADP compiles labor market data based on the 24 million U.S. employees whose employers contract with ADP to handle their payrolls.
Some areas of the labor market are havens for job switchers. Nearly half of all leisure and hospitality workers and one-third of those in professional and business services changed jobs in the past year.
Job hoppers snare bigger pay increases than their more loyal colleagues. In the first quarter, switchers who worked full-time realized average annual earnings gains of 5.2%, compared with 4.3% for full-time job holders.
“As the labor market tightens, employees have more power,” said Ahu Yildirmaz, co-head of ADP’s research institute. The 4.4% unemployment rate has resulted in a smaller pool of idle workers, forcing firms to bid up to lure employees from other companies.
One reason businesses should be nervous: 63% of workers are open to making a switch, according to a separate national survey of 2,156 employees that ADP conducted. Seventeen percent are looking while 46% are receptive to an overture from a recruiter.
Employers are a bit too complacent. Those surveyed say 49% of their employees are in the market, according to their average estimate. “There’s a disconnect,” Ahu said. “Employers really have to think about how to attract, how to engage and how to retain employees.”
Alfredo Rodriguez, 29, of Denver took an entry-level marketing job with a local mortgage company in September 2015. Within a year, he landed interviews for two higher-level positions and received offers for both. He accepted one as marketing coordinator for a national mortgage firm, snagging about a 20% raise. He said he decided to start job-hunting after hearing from friends and college classmates about an abundance of openings.
“I got a little bit of a sense there were more jobs out there,” he said.
ADP’s survey found that, all else equal, a 13% bump in pay would be enough to coax an employee to switch jobs, based on respondents’ average estimate.
Yet money isn’t necessarily the chief reason employees bolt.
Work Institute, a research firm, found that 22% of employees left their jobs last year for career development, followed by work-life balance (12%), management behavior (11%), compensation and benefits (9%) and well-being (9%). Its findings were based on analysis of more than 34,000 exit interviews.
Employees "want to grow and learn, not just climb up the corporate ladder," said Rajeev Behera, CEO of Reflektive, which produces performance review software.."To keep top talent, companies need to provide a more structured approach to employee development and ask managers to think of themselves as coaches "
Millennials are especially antsy, having an average job tenure of less than three years, according to Tony Lee, who manages talent acquisition issues for the Society for Human Resource Management.
Since many firms have limited ability to increase pay, they should find other ways to reward workers in today’s hyper-competitive market, Lee said. Those include flexible hours, the option to work at home and even awards that shouldn’t wait until employees reach their fifth, 10th or 25th anniversaries, Lee said.
“If people feel they're being recognized, they're less likely to go somewhere else to look for” that acknowledgment, he said.