Low earners might be more reluctant to switch jobs, new study finds
During the COVID-19 pandemic, however, low-wealth workers who would typically be more reluctant to seek out new jobs actually did the opposite.
A new paper shared by the Office of Financial Research suggests that workers’ personal wealth and salary might affect their likelihood of switching jobs – both in times of employment and unemployment.
According to the author, Daniele Caratelli, workers who have less personal wealth experience labor market downturns in a much more pronounced way than workers with a higher level of wealth.
The study found that workers who earn less tend to be more reluctant to change jobs in order to avoid the increased risk of short-term job loss brought about by switching roles. This tendency to remain in the same roles contributes to the slower earnings experienced by low-wealth workers, relative to those who make more.
During the COVID-19 pandemic, however, low-wealth workers who would typically be more reluctant to seek out new jobs, actually did the opposite. The paper suggests that the introduction of the government stimulus during the pandemic alleviated much of the risk felt by low-wealth workers looking to transition roles.
In comparison, the study found that the Great Recession played a large role in expanding the earnings gap between low and high-wealth workers. According to the author, this tendency among low-wealth workers to remain in the same role accounts for half of the earnings gap between low and high-wealth workers after the Great Recession.
Related: Health care workers burned out, but look to switch jobs, not careers
The study found that after the Great Recession, “workers with below median wealth experienced on average a 10% decline in real earnings, a fall that took more than four years to recover. In contrast, workers with above median wealth experienced only a small and short-lived drop in earnings.”
If the hesitancy for low-wealth workers to switch jobs is accurate, it would mean that low-wealth not only experience the greatest consequences of recession, such as the Great Recession, but also are the least equipped to face them, according to the study.