According to an amazing statistic from the Bureau of Labor Statistics the average job tenure of all American employees in 2014 was 4.6 years.
What words of wisdom may we glean from this fact? Experience suggests that, depending on the job and the organisation, it might take, say, a year or two for a new employee to become really effective in a job. He or she has to understand the workings of the company, its market, the way to get things done, the internal politics. Which means that American organisations only get about two and a half effective years-worth of work from the average employee.
And then, just when he or she is becoming a really useful part of the team, guess what? Either the person is fired or, disillusioned, is looking for another job. Thus, there is little continuity and little institutional memory. This is just plain inefficient. I maintain that if companies held onto, trained and nurtured their employees, building trust and loyalty, the profits would be greater. The hire-and-fire nature of the American workplace, particularly in financial services, is famous throughout the world, as is the preoccupation with productivity. All I can say is that productivity would be even better if the retention rate of employees were better.
To be a bit more sophisticated, it might be better to look at the retention rate of the people most important to the organisation. What is happening in real life is that the hiring and firing is probably happening to younger and less experienced people, who are now on these horrible short-term contracts that offer no security and the prospect of constantly looking over the shoulder for new jobs. It’s hard to contemplate getting married and buying a house when unemployment is a constant threat. Epicurus beleved that loyalty was a two- way street.
I’m very glad I don’t live in America, with that level of job insecurity. Having said that, I’m genuinely frightened of the way things are becoming in the UK: an increasing use of zero-hours contracts and a trend towards more liberal labour laws. I’m hoping the higher minimum wage will encourage employers to keep employees for longer, by removing the financial incentive to fire long-term employers and replace them with newcomers.
Another problem with America is that it is an unnecessarily unpleasant experience to be unemployed. Support for the unemployed is often reduced on the assertion that more generous unemployment benefits make people less likely to look for work. But such an assertion is unfounded: unemployment, particularly long-term unemployment, is always highly unpleasant. People always want to find suitable jobs as soon as they can. Reducing unemployment benefits will push more innocent people into poverty, or at least coerce them into taking unsuitably low-paid jobs for their skill set, instead of spending time looking for the more skilled and higher paid jobs their experience and qualifications command.