Older Workers Embrace Job Hopping – And It’s Good for Their Retirement Prospects – Center for Retirement Research
Job-to-job commuting allows workers to trade up to higher-paying employers.
When I talk to relatives about my work as a labor economist, I get the feeling that they think younger generations are fickle about their jobs. At many family gatherings, I’ve heard some sort of similar comment. “You know, we’ve been working the same job forever, you all just go.” When this happens, I nod my head but think: “you’re not right.”
In fact, the rate at which people change jobs has decreased over the past few decades. Between the 1990s and 2010s, a recent study from the Federal Reserve found that the job-to-job transition rate dropped by nearly a third. The reasons for this decline are not well understood but have implications for the labor market and retirement security. Despite what my relatives seem to think, moving is probably a good thing for the economy. In an overwriting labor market, job-to-job changes allow workers to “trade” to higher-paying employers and thus tend to raise wages. Work-to-work mobility also benefits the macroeconomy by allowing workers to gradually move to jobs they are better at, increasing productivity.
For older workers in particular, reduced mobility can also be a problem. The work I did with Steven Sass showed that workers who voluntarily changed jobs at age 50 had significantly longer careers than those who planned. Among workers with at least some college, 45% of those who stayed at their first job were working at age 65 compared to 55% of workers who moved jobs. For workers with a high school degree or less, those numbers were 40% and 48%, respectively. Given that extending one’s career is often one of the best ways to improve retirement security, an overall decline in employment may be a threat.
The question is: has the way of older workers followed all this trend? Some evidence suggests that the biggest decline in commuting is concentrated among young workers. But no study that I know of has looked at people in their 50s. Also, even the work of young workers stops pre-COVID. So, I wondered what happened to all the work flow and the mobility of older workers in these tumultuous years of COVID and its aftermath.
To check all this, I followed the method of the paper that was recently used Current Statistical Statistical Survey Annual Supplement to look at the movement of an individual during a given year. Basically, this paper asked what number of people moved from one employer to another in the previous year without the unemployment intervention. Figure 1 shows the results from 1990 to 2024 divided into two age groups: 1) 20-49; and 2) 50-59.
For both age groups, the highest rate of travel occurred in the year 2000 after a rise in the 1990s. However, the minority group experienced significant declines during the Dotcom Recession and the Great Recession. And, despite increases in travel in the 2010s, travel rates for those aged 20 to 49 remain below their 2000 peak. On the other hand, in those 50-59 years, the decline in travel during the recession was very small. And they recovered almost all the way to their 2000 peak.
Therefore, older workers seem to have stopped the downward trend. Or, at least they have for now. As I mentioned in a recent post, job market measures have been all over the place. The two measures most closely associated with mobility — job openings and layoffs — have fallen sharply from their post-pandemic highs. And unemployment has risen from a post-pandemic slump – in February it rose to 4.4 percent as the US suddenly lost jobs. Given the relationship between labor market weakness and mobility shown in the figure above, one wonders whether job changes may be ready to slow down and how older workers will be affected. It’s something I’ll be watching closely in the coming year, given its far-reaching implications for younger and older workers.
