Record low unemployment has squeezed businesses as an increasing number of workers voluntarily quit their jobs to work elsewhere, a sign of labor market strength that could boost President Trump’s reelection prospects.
Between 2010 and 2018, voluntary worker turnover increased 88%, according to a new report by the Work Institute, an employment consulting firm. It compiled its findings from thousands of exit interviews and the Labor Department’s Job Openings and Labor Turnover Survey, which shows a rise in the rate of those quitting as the economic expansion proceeds. These increases saddled businesses with lost productivity and added expenses for retraining replacement hires.
The Work Institute conservatively estimated that the cost of losing a single employee is $15,000. In 2018, 41.4 million U.S. workers voluntarily left their jobs. As a result, companies took a $617 billion financial hit to their bottom lines because of worker turnover. The cost nearly doubled relative to 2010, when it totaled $331 billion. If the current acceleration rate continues, the cost of lost workers will increase to $800 billion by 2023, according to the report.
Amber Clayton, knowledge center director at SHRM, a nonprofit organization that represents and trains human resources professionals, said that members within her organization are having a difficult time replacing workers.
“We have heard through focus groups and surveys that employers are having a difficult time hiring and retaining individuals because there are some individuals who are leaving for various reasons, such as higher wages or better benefits,” Clayton told the Washington Examiner.
A recent survey from her organization showed that 83% of respondents had trouble recruiting suitable candidates for a job in the past 12 months. The scarcity of potential hires has led companies to try new ways of retaining current employees.
Other than offering increased wages and better benefits, more companies are allowing flexible work schedules that include working from home. Businesses have also expanded how they attract new hires by using social media and creating a more comprehensive search for candidates than what they’ve previously done.
Meanwhile, the timing is right to switch jobs. The number of job openings has exceeded the number of unemployed persons for 22 consecutive months, according to the Labor Department’s latest report on employee turnover. Also, wage growth for workers who stay at their current job is 4.6%, compared to the 5% growth workers get who switch jobs, according to ADP, a payroll processing firm. Other estimates show that job-swapping can boost salaries by 15%, versus 3% for those who remain with the same employer.
In other words, it’s a worker’s market as opposed to a boss’s market, which could help Trump’s reelection bid.
“Sitting presidents get credit for what happens on their watch whether they deserve it or not,” said Doug Holtz-Eakin, who heads the economic think tank American Action Forum and is a former John McCain presidential campaign official.
“This is … something that will actually benefit him greatly,” Holtz-Eakin told the Washington Examiner.
The unemployment rates under Trump have not been so low since Richard Nixon’s first term as president. Record low unemployment rates have also prompted people who recently abandoned the job market to reenter and get a job, according to Holtz-Eakin.
“The only way we manage to keep creating 180,000-odd jobs a month is by drawing into the labor force the people who had been discouraged and not really attached to work, and we get them to come in, and look, and get a job, and that’s a huge benefit to their lives,” he said, adding that once a worker returns to the job market, he or she is unlikely to abandon it again.
President Barack Obama won reelection in 2012 with an unemployment rate of 7.8%. President Ronald Reagan won a second term in 1984 with a 7.4% unemployment rate. Trump’s unemployment rate is currently half of theirs, and if it remains that way, it will bode well for his reelection.
Still, voters who are betting a strong economy will reelect Trump might be in for a rude awakening. New research by political scientists shows that the bond has weakened between strong economic performance and incumbent presidents winning reelection.
Ellen Key, associate professor of political science at Appalachian State University and one of the study’s authors, told the Washington Examiner via email that “there’s a certain segment of the population that doesn’t like the president regardless of how the economy is doing.”
