The changing nature of job security in the United States

Daniel Polsky, University of Pennsylvania


There is a widespread belief among the U.S. workforce that job security has declined dramatically in recent years despite low unemployment rates. What explains this negative view of job security? First we examine the temporal evolution of job retention rates in U.S. labor markets, using data assembled from the sequence of Current Population Survey job tenure supplements. There have been relative declines in job stability for some of the groups that experienced the sharpest declines in relative wages. In particular, retention rates have declined for high school dropouts and high school graduates relative to college graduates, and for blacks relative to whites. However, we find that aggregate job retention rates have remained stable.^ Next, I look at changes in the consequences of job loss to explain growing job insecurity during this period of stable job durations. Using the Panel Study of Income Dynamics I compare the job histories of male workers between the years 1976-81 and 1986-91. I find the incidence of overall job separation has remained stable, while the incidence of workers involuntary losing their jobs has increased modestly. The consequences of involuntary job losses, however, have undergone a dramatic deterioration. Workers who experience an involuntary job loss in 1986-91 versus 1976-81 are 8.2% less likely to become reemployed and those who do become reemployed have a 15% greater chance of receiving a large pay cut in their new job. This deterioration in the consequences of involuntary job loss can explain how job insecurity and stable job durations can exist simultaneously in today's labor market. The rising costs of job loss have made job security more vital than in the past. In contrast to the experience of workers who separate from their employer involuntarily, quitters in 1986-91 are no more likely to face a large wage loss than those in 1976-81, but are 6.8% more likely to face a large wage gain. This divergence by type of job loss is consistent with the evidence of growing dispersion of the cross sectional wage distribution. ^

Subject Area

Management|Labor economics

Recommended Citation

Polsky, Daniel, "The changing nature of job security in the United States" (1996). Dissertations available from ProQuest. AAI9627988.