How Musical Chairs - Or Churn - Affects Your Chances of Getting a New Job
When you're looking for a new job, economic health plays a big role in the availability and quality of jobs you'll be able to find. A portion of the healthy job market is made of the number of new jobs being created, like these top growth jobs of 2014. But the vast majority of hiring in the U.S. is driven by the need to replace workers who leave one job for another.
Every year, tens of millions of people will leave jobs - either voluntarily or after getting laid off - and tens of millions of people will be hired to fill the newly vacant positions. This is called labor market churn, and sounds a lot like how musical chairs works. A high rate of churn in the economy is seen as a positive indicator of labor market health, similar to when musical chairs begins a new game and there are plenty of seats for most of the players. A new report by CareerBuilder and Economic Modeling Specialists International takes an in-depth look at churn rates across the country in The Pulse of U.S. Hiring Activity: Labor Market Churn by Occupation and Metro.
When the Great Recession hit the labor market, the churn rate for all non-farm occupations plummeted by 23 percent, meaning that employed workers were less willing to leave their jobs and that employers were hesitant to fill vacant positions and add headcount. It bears a resemblance to the final rounds of musical chairs, when the remaining players understand that every time they get up from their chair, they're not guaranteed another seat.
This first chart shows the churn rate when it fell during the Great Recession:
But when you look at different industries, you'll find that churn rates vary greatly by occupation. The type of work performed in an occupation and the nature of the industries that employ the occupation tend to dictate overall turnover.
For instance, as of 2013, food preparation and serving occupations had the highest churn rate at 109.4 percent, while architecture and engineering occupations had the lowest at 44.8 percent, just below legal occupations (45.1 percent).
The nature of each industry has created its own churn rate, and to determine its health, you need to compare broad occupation groups (depicted in the chart below) against their own churn rates at different time periods:
Different workers will have different expectations about churn, and it usually comes down to occupation and field. Consider the restaurant industry, wherein hundreds of thousands of establishments employ nearly 10 million workers across the U.S. in jobs that are often part-time, low-pay or seasonal. The transient nature of this type of work is why it's possible to have churn rates above 100 percent. This is completely normal for some positions within the entertainment, restaurant, hospitality and construction industries.
And to predict whether an occupation has high or low churn, look at what it pays. An analysis of all 768 occupations found that low-wage jobs tend to have higher churn rates, and higher-wage jobs tend to have lower churn rates. Look at the chart below:
This means that churn can have a huge impact on the number of positions you're likely to hold over your career. If you're choosing a career path, you need to ask yourself how comfortable you are playing musical chairs for jobs - if you like job security and a more traditional work life, an occupation with typically low churn rates is a good decision since it's unlikely that you'll be asked to give up your spot.
Jobs with a typically higher churn rate may suit workers earlier in their career who are interested in trying out different options, those who travel a lot or have a wide variety of skills and experience. The important thing is to recognize how churn affects your own specific job search, as well as how the health of the economy is affecting the number of seats you'll find available.
To get a more in-depth look at churn rates across the country, check out the full report here: The Pulse of U.S. Hiring Activity: Labor Market Churn by Occupation and Metro, by CareerBuilder and EMSI.
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