Lower Job Churn Hurts Young Workers

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from The Wall Street Journal,

Job-Hopping Can Boost Résumés, Lifetime Pay.

Quitting a job often can be a good thing. But not enough workers have been doing it.

During and after the recession, the U.S. economy has been too weak for many workers to undertake the sort of job-hopping that economists say is critical to building careers and advancing the nation’s long-run growth prospects. The consequence: Even many Americans who have remained employed have stunted their earnings growth by staying pinned down to their current jobs.

The weak job churn is among Federal Reserve Chairwoman Janet Yellen’s leading concerns about an economy that is improving steadily, but with substantial scars just beneath the surface.

Ms. Yellen, who is set to deliver the Fed’s semiannual report to Congress on Tuesday and Wednesday, regularly highlights her concerns about the lack of dynamism in the labor market. “People are reluctant to risk leaving their jobs because they worry that it will be hard to find another,” she said earlier this year.

By hopping from employer to employer, especially early on, workers find jobs better-suited to their skills, build their résumés, bid up their salaries and boost lifetime earnings prospects. They eventually settle down and change jobs less frequently.

“One of the characteristics that is uniquely American is that changing jobs is the way you get promoted,” said Anthony Carnevale, an economist who directs Georgetown University’s Center on Education and the Workforce.

While the nation’s jobless rate dropped to 6.1% in June, the lowest in nearly six years, the improvement masks the fact that many workers who held jobs throughout the downturn and recovery struggled to advance.

Their plight is best captured by the collapse in the monthly hiring rate, from 5.5 million in 2006 to as low as 3.6 million in 2009, according to the Labor Department. It was 4.7 million in May, the latest figure available.

People leave jobs by two main ways: voluntarily quitting for a better job, which is beneficial, or getting laid off, which is detrimental. In the recession, the rate of career-damaging layoffs spiked. It has since returned to its prerecession levels.

The number of people voluntarily leaving positions fell by nearly half to 1.6 million in 2009 from 3.1 million in 2006. It stood at 2.5 million in May.

As churn slowed, workers began clinging to their jobs.

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