The Ups and Downs of Job-Hopping

Right now, Kevin Hill is between jobs. But the 27-year-old isn’t too worried just yet. After all, he’s young and marketable and the nation’s unemployment rate hasn’t been this low since World War II.

“I’m looking with consulting firms,” Hill said. “Maybe software implementation. I’ve also been looking at the staffing industry.”

When he finished college four years ago, Hill took a $29,000-a-year job as a research analyst for the Washington Consulting Group in Bethesda, Md. In addition to his research duties, Hill worked his way up the corporate ladder to a management and recruiting position.

That piqued his interest in that area, so Hill decided to leave Washington Consulting last August to pursue a career in retail management. He then signed on as store manager with J.B. Sims Fine Tobacco in Bethesda.

“It seemed like a lucrative deal,” said Hill, whose base annual salary was $30,000, plus bonuses. “I changed because I figured I was going into a growth industry and I wanted to be in customer service and retail management.”

But for Hill, it turned out to be less than a dream job, and he quit last month.

Hill’s job-hopping is typical in an enormous subset of the work force: young, skilled workers who are open to new opportunities. As a result of corporate downsizing, vanishing employer-employee loyalty and a fast-paced work world, these Generation X workers are willing to move from company to company with little thought to the future, workplace experts say. Often, these experts say, they don’t stop to consider what harm that may do to their future earnings.

A new report suggests they don’t have to. Released last month, a federally funded study conducted by Ohio State University found that workers who jump from job to job early in their careers aren’t jeopardizing their earnings potential as they get older. The study concluded that this is especially true for men, and that those men who stayed with one company throughout their careers made 5% to 7% less than those who switched firms.

“What it shows is that if you switch around when you’re younger, it doesn’t appear to affect wages,” said Rosella Gardecki, a research associate at Ohio State who co-authored the report. “It also says that switching around to find the best match for employees and employers is good.”

The study included 2,844 people as part of the National Longitudinal Survey of Youth. The participants were between the ages of 14 and 22 when the survey began in 1979. Their careers were tracked until 1992.

The salary disparity between men and women reflects, in part, the fact that young men often take their initial jobs in lower-wage industries such as construction, said David Neumark, an economics professor at Michigan State University who co-authored the report.

But before young workers start handing in their resignations, there are a few hard-to-quantify factors to consider, Neumark said. Primarily, workers should consider the nature of the labor market they’re in, he said.

So where do we stand right now?

“Now people are doing terrifically,” Neumark said. “Seniors are having the most success they’ve had in 20 years. In this good market, it provides the luxury to leave a job and come back; it’s perfectly sensible for young people to do.”

Nonetheless, some experts caution that there are some very tangible reasons to stick with one company for a long time.

“Under some circumstances there are unambiguous advantages to long tenure,” said Jay Meisenheimer, an economist with the Department of Labor.

Most of those advantages involve benefits. Vacation time is almost always based on seniority, Meisenheimer said. In addition, defined-benefit pension plans are bolstered over time and 401(k)-style retirement plans reap the benefits of steady, longtime investments and employer contributions, he said.

But a better-paying job often can more than make up for these losses, Meisenheimer acknowledged. “It all comes down to finding a good match,” he said. “Not everyone can find that on their first try, so a change can help.”

Finding that good match is what Hill is determined to do.

“Before, I figured there’s nothing to lose if I tried a couple things,” he said. But Hill said he now realizes that he’s fast approaching the age when he needs to consider the entire array of factors. “I’m much more concerned now.” he said. “I just keep on thinking it’ll be more beneficial down the road if I stay at one place for a while. For instance, I’d like to start contributing to a 401(k).

“Prior to 25, though, it really wasn’t much of a concern.”