Workers have been job hopping in the hopes of attaining better pay and career mobility in the uncertain Covid-19 economy, and it is a trend that millennials and Gen Z are expected to dominate again in 2021.
One in four workers plan to switch jobs this year, an increased pace compared to last year. Of the one in five workers who switched jobs last year, 33% identified as Gen Z and 25% as millennial, according to a new study from IBM's Institute for Business Value.
Gallup identifies millennials as the most likely among generations to switch careers and suggests that six in ten millennials are open to new job opportunities. But the idea that millennials and Gen Z created this trend is a common misconception. Every generation job hops in their youth in the search for the right career fit, and some data suggests that millennials are job hopping at a slower rate than their previous generational counterparts at the same age.
Across the board, younger people including those in their 30s and 40s are much more likely to shift jobs and take risks compared to older workers who are more established in their careers, according to Gad Levanon, vice president of the Labor Markets Institute at The Conference Board. With the worst of the pandemic behind the U.S., and accelerated vaccine rollouts nationwide, people foresee a reopening of industries like retail and air travel, and aren't as worried about significant layoffs or being the "first to go" in a new role.
"It's a period with a lot of changes and combined with strong economic growth, people are no longer afraid to switch jobs," Levanon said.
Younger Americans are updating some of the tactics in career switches for a changing world. Not only are younger workers seeking job mobility, but they're also looking for flexible and remote work schedules, a need that's come to the forefront amid Covid-19. Many younger workers are also incorporating skills training to market themselves as more competitive candidates.
The role of millennials in the job market is of growing significance. Based on July 2019 population estimates from the U.S. Census Bureau, millennials have surpassed Baby Boomers as the largest living adult population, and made up more than one-third of the U.S. workforce in 2018, according to Pew Research Center. The organization defines millennials as those born between 1981 and 1996, while Gen Z begins with those born in 1997.
Some of the most prominent reasons for job hopping include the desire for career mobility and higher wages, a growing need as employer pension plans become a thing of the past and workers need to devote more of their incomes to retirement savings. Between 1975 and 2017, pension plans dropped from more than 103,000 to just about 46,700, according to the Labor Department.
Younger workers are also sensitive to lack of recognition or transparent feedback from supervisors, which can lead workers to feel undervalued and ultimately move to a new company where they may be in a better position to negotiate pay, said Sarah Stoddard, a career expert at Glassdoor.
Several companies, including global staffing firm Robert Half, offer salary calculators to job seekers as a tool to use for negotiations. Glassdoor has its own version called the Know Your Worth tool, which offers pay recommendations based on market value.
Amid this drive for higher wages and mobility, corporations will need to shift how they prioritize and invest in employees to retain talent. For example, companies may need to offer flexible benefits based on stages in life and internal mobility, said Amy Wright, managing partner of talent and transformation at IBM.
One of the biggest concerns for workers, as indicated in the IBM study, is the need for more flexible schedules. Workers want a better work-life balance, increased benefits and job support, but they are also looking for skills development, which can qualify candidates for jobs typically out of their reach, Wright said.
Fifty-eight percent of those surveyed by IBM said that they plan to take continuing education courses this year, while roughly 30% of Gen Z and millennial respondents surveyed said they will enroll in a formal degree, certification or badging program.
Continuing education and skills building has emerged as a way for job seekers to distinguish themselves. IBM offers SkillsBuild, a platform that allows workers to sharpen skills like their computer literacy or data analytics through online courses. Several major companies including Google and Microsoft's LinkedIn also offer courses for workers, as do online education platforms that have boomed during the pandemic, including Coursera.
The shift to online amid Covid-19 and growth of digital technology within the last decade has simplified the ability to job hop, while making it easier for talent to interview and work for companies out of their region.
"It's an availability of opportunity that didn't exist in previous generations," Wright said.
Once deemed a red-flag for recruiters, switching jobs has become more common and accepted, said Vicki Salemi, a career expert at Monster. The pandemic will further destigmatize job-hopping, but it also has led to financial stress that may further exacerbate the need to find new employment. With the rise of student loans and an uncertain economy, there's a sense of urgency for new workers to find a job that pays the bill, which means many individuals entering the job market are settling for jobs that aren't the right fit.
"They may not necessarily find the right fit in the first job or even the next one," Salemi said.
While new job seekers may struggle, employers are becoming more open to candidates they may not have considered in the past. Data from the Monster's Future of Work 2021 Global Outlook found that industries including health care and hospitality are becoming more open to graduates without previous experience in the field, while nearly half of large businesses surveyed are reporting higher acceptance of candidates living outside their geographic area.
The data showing that millennials and Gen Z are switching jobs at lower rates than previous generations has some economists concerned, said Tara Sinclair, a senior fellow at Indeed. "There has long been this maligning of millennials as being job hoppers. I think that that's the wrong story," Sinclair said. "Job hopping is something we want to see more of."
High rates of job hopping is oftentimes an indication of a strong economy or that workers feel confident that they can shift employers, without taking a pay hit. A bustling economy and and low unemployment generally boost confidence in the trend.
Between the 2001 recession, Great Recession and pandemic economic crisis, economists and experts say that millennials have been one of the hardest-hit age groups financially in the past few decades. Although many have yet to recover from the fallout.
Data from the Bureau of Labor Statistics suggests that individuals born between 1957 and 1964 held 12.3 jobs on average, nearly half of which were held when they were between 18 and 24. Job hopping has also been on a decline since 2000, according to data from Steven J. Davis of the University of Chicago's Booth School of Business and John Haltiwanger of the University of Maryland.
Millennials are actually job hopping at lower rates than Baby Boomers and Gen X did at the same age, according to Gray Kimbrough, an American University economist."It dropped off a cliff in the 2001 recession and never recovered," Kimbrough said.
Many millennials, who were hard-hit by the Great Recession, are still recovering more than a decade later. A survey from TD Ameritrade found that 46% of millennials say they are still recovering from the crisis, a situation which may only deteriorate as a result of the pandemic.
Over the last decade, many millennials have relied heavily on the gig economy which boasts jobs like ridesharing drivers, delivery workers and freelance writers. The industry's seen rapid growth during the pandemic and a recent study from Upwork found that gig workers contributed $1.2 trillion to the U.S. economy during the pandemic, a 22% increase from 2019.
Gig workers at U.S. businesses have reportedly increased 15% since 2010, based on data from the ADP Research Institute. But even as the industry grows, some paychecks are beginning to shrink with increased competition among jobless Americans.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.