Job tenure and long-term employment in decline

Job Loss and the Decline in Job Security in the United States
Henry S. Farber
Princeton University
CEPS Working Paper No. 171, June 2008

“Job tenure and the incidence of long-term employment have declined sharply in the United States. However, rates of job loss as measured by the Displaced Workers Survey (DWS), while cyclical, have not increased. This presents a puzzle that has several potential solutions. One is that, while overall rates of job loss have not increased, rates of job loss for high-tenure workers have increased relative to those for lower-tenure workers. Another is that there has been an increase in rates of job change that is not captured in the limited questions asked in the DWS. Some of this seemingly voluntary job change (e.g., the taking of an offered buy-out) may reflect the kind of worker displacement that the DWS was meant to capture but is not reported as such by workers.

In this study, I address these issues by 1) documenting the decline in job tenure  and long term employment using data from various supplements to the Current Population Survey (CPS) from 1973-2006, 2) documenting the lack of secular change in rates of job loss using data from the DWS from 1984-2006, and 3) exploring the extent to which the observed patterns result from a relative increase in rates of job loss among high-tenure workers. I find that the decline in job tenure and long-term employment is restricted to the private sector and that there has been some increase in job tenure and long-term employment in the public sector. I find no secular changes in relative rates of job loss in either sector that could account for these trends. Reconciliation of the trends in the tenure and displacement data must lie with a failure to identify all relevant displacement in the
DWS.”

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