How secure are American jobs? Conventional wisdom holds that
Americans are more likely to be laid off today than they were a
generation ago and that globalization and corporate greed are
putting more and more jobs at risk. Good jobs are being outsourced
to countries where workers earn a fraction of American wages.
The era of jobs for life is over; even long-time employees are no
longer safe. Today, it seems, no job is secure.
This perception, like so much conventional wisdom, is
wrong. The stories that fill the media about decreasing job
security are heart-wrenching individual examples of Americans
in dire situations, but discerning whether American
workers' job security in general has changed requires analysis of
Government data show that American workers are substantially
less likely to lose their jobs today than they were a
generation ago. Today, many more workers change jobs voluntarily.
The reports of middle-aged workers heartlessly laid off
misrepresent the experiences of most Americans.
Conventional wisdom holds that American's jobs are increasingly
unstable. A generation ago, diligent workers could count on
lifetime job security with a single company. Businesses respected
and protected their employees.
Today, the prevailing wisdom holds that this has changed.
Corporate greed-or at least an increased focus on the bottom
line-supposedly means that hard work no longer guarantees a
lifelong job. Media stories about companies callously laying off
long-time workers abound. Globalization is exposing workers to
new competitive pressures. Good jobs are said to be disappearing
overseas, leaving burger-flipping for Americans. For millions
of American workers, a pink slip could arrive at any time. The very
idea of a lifetime job has disappeared.
Anecdotes Are Insufficient
This conventional wisdom about out-of-control job loss rests on
a weak foundation. It is not based on empirical studies of how job
security has changed over time. Instead, it is based on
heart-wrenching but anecdotal stories of workers who lost their
jobs or reports about the number of jobs lost to foreign
But such reports do not demonstrate anything. Sizeable job
losses are natural in an economy as large as America's. The U.S.
economy is in constant flux. Employers created 57.8 million new
jobs in 2007 while ending 54.6 million positions. XREF
With tens of millions of jobs created and terminated
each year, there will always be Americans who lose their jobs in
dire circumstances. There are also tens of millions of employees
who stayed with their employers and earned salary increases or who
changed jobs for better pay. Individual tragic stories reveal
little about whether workers in general are more likely to lose
Facts Based on Data
Understanding how job security has changed over the past
generation requires examining data trends instead of anecdotes. The
Heritage Foundation analyzed data from the 1976-2007 Current
Population Survey (CPS) and the March supplement to the CPS
collected in a joint project of the Census Bureau and the Bureau of
Labor Statistics. The CPS is a monthly survey of American
households that the government uses to estimate the
unemployment rate and other economic statistics. In March of each
year, the CPS includes a supplemental survey that asks
respondents about their income and employment in the previous
The Heritage Foundation adapted a methodology developed by the
Bureau of Labor Statistics, combining data from the basic CPS
and the March supplement to identify workers who changed jobs,
became unemployed, or left the labor force over the previous year.
Using this method, it is also possible to estimate whether these
workers changed jobs voluntarily or involuntarily.
Voluntary vs. Involuntary Job
It typically takes workers several weeks or months to find a new
job after their employers fire them or lay them off. Workers who
become involuntarily unemployed rarely find work the week
after leaving their old jobs. Workers who voluntarily change jobs,
on the other hand, typically spend little time unemployed
between jobs. They left their old employers because they had a
better offer from another employer.
The fact that workers who voluntarily switch jobs usually spend
little time unemployed between jobs makes it possible to use CPS
data to identify the types of transitions that employees make.
- An employee who changed jobs over the previous year and at
the time of the March survey was either unemployed or unemployed
for more than two weeks between jobs is classified as an
involuntary job-to-unemployment switcher.
- A worker who switched jobs, was employed at the time of the
March survey, and experienced two weeks or less of unemployment
during the job change is classified as a voluntary job-to-job
- A worker who was employed in the previous year but left the
labor force at the time of the March survey is classified as a
worker who leaves the labor force. No assumptions are made about
whether the choice to leave the labor force was voluntary or
These definitions are not perfect. Some employees who lose
their jobs do find new work immediately, so some workers
classified as voluntary job switchers are not. Conversely, some
workers currently unemployed left their old positions
voluntarily, and some workers who leave their old jobs for new
ones spend more than two weeks unemployed before starting their new
However, these definitions do reasonably approximate whether
workers chose to leave their employers or not. This allows a
factual examination of how job security has changed over time. For
more details on these calculations, see Appendix A.
Job Stability vs. Job Security
The distinction between voluntary and involuntary job
changes is important. Concerns about decreasing job security are
legitimate. Most people find unemployment painful. The unexpected
loss of income and the risk of not finding a comparable new job
affect families financially and emotionally. If employers have
become more likely to lay off their employees, this will affect the
well-being of millions of American workers.
Changes in job stability, on the other hand, should not
worry workers or policymakers if they occur because workers switch
jobs voluntarily. Most workers who do so prefer their new jobs to
their old ones. Congress should not be concerned if Americans are
more likely to change jobs today than they were a generation ago.
If anything, that mobility demonstrates that Americans have more
job opportunities and options than they had in the past.
Increased Job Security and
Chart 1 shows the probability that a worker left his or her job
for any reason over the preceding year between 1976 to 2007.
Workers are less likely to leave their jobs today than in the past.
From 1975 to 1976, almost a quarter-24 percent-of workers
separated from their jobs over the course of the year. By 2006 and
2007, that figure had fallen to 20 percent.
Charts 2 through 4 break down these overall separations
into job-to-unemployment, job-to-job, and
job-to-outside-the-labor-force switches. They differ
Workers are much less likely to lose their jobs today than they
were a generation ago. This probability rises and falls with
the business cycle, but the trend is steadily downwards. The
typical worker had a 10 percent chance of losing his or her job
between 1975 and 1976. Contrary to popular perceptions, the
1970s were not a golden era of lifetime jobs. Today, only 5 percent
of workers lose their jobs over the course of a year. Job security
has increased markedly over the past generation.
Workers have become more likely to move between employers
voluntarily over that same time period. Unsurprisingly, workers are
more likely to make voluntary job changes in good economic times
than during recessions.
Again, however, the trend is clear. Between 1975 and 1976, only
8 percent of employees stopped working for one employer and
promptly started working for another. Fully 12 percent chose to
change jobs between 2006 and 2007. The labor market offers workers
much more mobility than in the past. This benefits American
workers. Increased mobility increases workers' choices and
Women have also become much less likely to leave the labor
force. Chart 4 shows the percentage of men and women who exited the
labor force in 1975-1976 and 2006-2007. Men are no more or less
likely to leave the labor force than they were in the past. Women,
however, are significantly less likely to leave the labor force
than they were a generation ago. Of the women working in 1975,
11 percent left the labor force by the following March. The same
was true of only 4 percent of women working in 2006. Society has
changed over the past generation, and women are now much more
closely tied to the labor force.
Examining Other Factors
Economists use regressions to examine relationships between
variables in greater detail. Appendix B reports marginal effects,
from probit regression estimates, on the probability of
switching jobs. These regressions control for age, education,
marital status, and geographic region. The Heritage Foundation used
these probit estimates to calculate the change over time in the
probability that workers would change jobs, controlling for these
Table 1 shows the change in 1975-1976 and 2006-2007 in the
probability that workers will leave their job, be fired, switch
jobs, or leave the labor force, expressed as a percentage of the
1975-1976 probability. The top row reports the overall change.
The results confirm the findings of the earlier analysis. The
probability that both men and women separate from their jobs for
any reason has fallen since the 1970s. Men are 6 percent, and women
10 percent, less likely to leave their jobs than in the early
1970s. Both men and women are significantly less likely to be laid
off and more likely to change jobs voluntarily than a generation
ago. Men are 39 percent more likely to change jobs and 46 percent
less likely to lose their jobs. Women are now 29 percent more
likely to move between jobs and 33 percent less likely to lose
their jobs. Women are also 35 percent less likely to leave the
labor force, while men's likelihood of leaving the labor force has
The belief that workers had more job security a generation ago
has no factual basis. Workers have more employment options today
than in the past but are much less likely to lose their jobs.
Age, Education, and Marital Status
Looking more closely at the data shows that these changes in job
opportunities and job security have not been uniform. The
subsequent rows show the change for specific demographic groups,
estimated separately. The separate rows should be interpreted as
the change in the probability over time for that demographic group.
For example, men ages 25 to 34 were 38.1 percent more likely to
make a job-to-job switch voluntarily between 2006 and 2007 than
they were between 1975 and 1976.
Although younger workers are more mobile overall, over the past
30 years, the job-to-job mobility of older workers has
increased significantly more than the job-to-job mobility of
younger workers. The increases in job security, however, have
occurred relatively uniformly across age groups.
Among both men and women, the workers whose job-to-job mobility
increased the most were workers without a high school degree.
Workers with some college education or a bachelor's degree have
seen smaller increases in mobility.
The vast majority of the decrease in women who choose to leave
the labor force has occurred among married women. Such women are
now 71 percent less likely to leave the labor force than in the
1970s. Among all other women, the rate of exiting the labor force
has fallen by 18 percent.
Changes During the 1990s
Table 2 presents the same estimates for changes in job mobility
since 1991-1992. This table shows how job transitions
have changed more recently. Job mobility has not increased as
rapidly since the early 1990s as it did in the 1970s and the 1980s.
Men were 10 percent, and women 8 percent, more likely to choose to
change jobs in 2006-2007 than in 1991-1992. Job security has
continued to increase at a rather steady pace. Women are 29
percent, and men 46 percent, less likely to lose their jobs now
than they were in the early 1990s.
The increasing labor force attachment of women has slowed since
the early 1990s. Women are now only 11 percent less likely to leave
the labor force than in 1992, indicating that many of the social
and economic changes that lead women to stay in the labor force
occurred before 1992.
The same trends evident since the 1970s continued in the
more recent period of 1992 to 2007. Older workers had a higher
probability of changing jobs voluntarily, while the increase in job
security was similar across all age groups. The job-to-job mobility
gains have been greatest for workers with a high school diploma.
Again, married women were the least likely to leave the labor
Changes by Industry
The preceding analysis does not show how job mobility and job
security have changed within industries. Table 3 shows the
probability by industry that workers will change jobs, lose
their jobs, or leave the labor force in 2006-2007 and how that
probability has changed since 1975-1976.
Workers in almost every occupation now enjoy more job security
than in the past. The only exceptions are telecommunications,
utilities, and sanitary services. The most secure jobs are with the
government. Civil service rules and public-sector unions
ensure that it is virtually impossible to lay off government
employees. Only 1 percent of local government workers and 2
percent of federal or state workers lost their jobs in
2006-dramatically fewer than in 1975.
Perhaps surprisingly, manufacturing workers' job security has
increased. Manufacturing employees were less than half as
likely to lose their jobs in 2006 as they were in 1975.
The employees most likely to lose their jobs work in agriculture
and construction: 11 percent of construction workers and 12
percent of agricultural workers lost their jobs and had extended
spells of unemployment. While these are high job losses, this is
far more job security than existed in these industries 30
Voluntary job changes are more common in many industries.
Utilities and sanitary services workers are, probably
unsurprisingly, the most likely to switch jobs: 22 percent of these
workers in 2006 changed jobs by 2007. Utilities workers are more
than 10 times as likely to change jobs today as in the 1970s. The
second most mobile industry is businesses and repair services, 18
percent of whose workers changed employers between 2006 and 2007.
This represents a 48 percent increase in mobility since 1975-1976.
Transportation, manufacturing, telecommunications, and
government employees are also more likely to change jobs than in
the past. However, agriculture, mining, construction, and
entertainment workers are less likely to choose to change jobs
today than a generation ago.
Overall, job security and job mobility have increased in almost
Job Transitions by Earnings
Job mobility has increased, and job security has improved over
the past generation. However, the experiences of the average
employee aggregates the experiences of workers at the top, middle,
and bottom of the economic ladder and may not reflect the
actual experiences of any group of employees. To examine labor
market conditions for workers at different income levels, The
Heritage Foundation included controls for income quintiles.
Workers' chances of either switching or losing their jobs differ
noticeably by income level. Chart 5 shows the probabilities that
workers will choose to change jobs, become unemployed, or leave the
labor force by income quintile. Low-income workers are more
likely to experience all of these transitions than are
high-income workers. The gap between low-income and high-income
workers has shifted, however. The changing labor market has not
affected all groups equally.
Table 4 shows how these transitions have changed over time by
income group. Low-income workers' job security has improved
disproportionately. Workers at the bottom of the economic
ladder are substantially less likely to be fired than they were a
generation ago. Men in the bottom quintile are now 60 percent less
likely to lose their jobs than they were in 1975, while men in the
top quintile are only 47 percent less likely to lose their jobs.
Women in the bottom quintile are 44 percent less likely to lose
their jobs than in the past, while women in the top quintile are
only 33 percent less likely to do so. Low-income workers have
enjoyed the greatest increases in job security.
On the other hand, high-income workers have benefited the most
from increased job mobility. While workers in the bottom quintile
saw relatively small increases in their probability of changing
jobs, workers in the top quintile are substantially-84 percent to
86 percent-more likely to change jobs than in the past. Workers in
the bottom quintile have become only slightly more likely to choose
to change jobs. Voluntary employee mobility has increased, but
primarily for workers outside the bottom of the wage
Mobility by Pension Status
Why has job-to-job mobility increased so sharply, and why for
predominantly middle- and upper-middle-class workers? Research
suggests that the transition from defined-benefit to
defined-contribution pensions has made workers more mobile. In a defined-benefit pension, the
employer guarantees a set benefit to the worker after retirement,
such as 1.5 percent of the worker's final salary multiplied by the
number of years that he or she worked. In a defined-contribution
plan, the employer contributes a set amount to a pension plan
owned by the employee-for example, by depositing an amount equal to
6 percent of the employee's earnings into a 401(k) account.
The structure of defined-benefit pensions often penalizes
workers who switch jobs, costing them significant retirement
income. Workers with defined-benefit pensions are often chained to
their jobs with golden handcuffs, unwilling to leave because they
do not want to lose a large portion of their pension benefits.
In the 1970s, defined-benefit pensions were the dominant pension
plans. Two-thirds of workers with pensions in 1980 had a defined
benefit pension. Legal changes in the 1980s encouraged
companies to start offering defined-contribution pensions,
which do not penalize workers for switching jobs, and employers
started doing so in large numbers. By 2003, that ratio had more
than switched, with 70 percent of workers with pensions being in a
defined-contribution plan. As this happened, workers
became more willing to switch jobs.
Starting in 1979, the CPS identifies workers that have pensions
but does not distinguish between defined-benefit and
defined-contribution pensions. Table 5 presents estimates of how
job-to-job, job-to-unemployment, and job-to-outside-the-labor-force
rates have changed for private-sector workers since 1979.
Job security improvements vary moderately by pension status.
Workers who are offered a pension plan at work and participate in
it saw a somewhat larger increase in job security than those
without pensions and a noticeably larger increase in job security
than workers who are offered pensions but do not participate in
Changes in job mobility, on the other hand, are almost entirely
dependent on pension status. Private-sector workers without a
pension plan, or those who did not participate in one that was
offered them, were no more or less likely to change employers
voluntarily in 2006-2007 than they were in 1979-1980. Workers with
a pension account for virtually the entire increase in job-to-job
mobility during this time period are 42 percent more likely to
switch employers now than they were a generation ago. This strongly
suggests that the increase in defined-contribution pensions has had
a major role in enabling workers to change jobs. Mobile pensions
have made for mobile workers.
It has become conventional wisdom that Americans have less
job security today than they had a generation ago, that
globalization and corporate greed have put the jobs of even
diligent workers at risk.
But like so much of conventional wisdom, this view is simply
wrong. American workers are significantly less likely
to find themselves involuntarily or unexpectedly unemployed than
they were a generation ago. This is especially true for
workers at the bottom of the economic ladder.
Workers today have more job choices available to them than ever
before. Defined-contribution plans allow workers to change jobs
without losing pension benefits, and American workers have embraced
this freedom. Workers with pension plans are significantly
more likely to change jobs today than they were in the past, giving
them the opportunity to seek out jobs that more closely suit their
Many Americans are understandably worried about their job
security during this current economic weakness. Job security
does rise and fall with the business cycle. However, policymakers
should understand that American jobs are more secure today than in
past years. Employers are much less likely to fire or lay off
workers now than they were during the 1991 or 1982 recessions. The
economy is going through difficult times, but workers have much
less to worry about than they had 30 years ago.
James Sherk is Bradley
Fellow in Labor Policy in the Center for Data Analysis at The
Heritage Foundation. The author thanks Heritage Foundation
intern Victoria Strokova, who performed the lion's share of the
data processing and analysis.