Lack of ‘Churn’ Still a Barrier for New Workers

Here’s an interesting little nugget for recruiters and talent managers keeping a close eye on the job market.

Even as the U.S. job market has finally begun to show sustained signs of life, growing stronger by nearly every measure, there is still one small element creating problems: Not enough people are quitting.

The Wall Street Journal reported Wednesday that the metric that tracks the number of employees voluntarily leaving one job for another in search of higher pay and new challenges, known as “churn,” has slowed.

The report said a high rate of churn is common in a prospering and humming economy, when a high volume of people may be switching between jobs and careers as better opportunities surface.

But, according to the Journal report, which cites the data involved in calculating the rate of churn from the U.S. Labor Department, that churning process has slowed in light of the most recent recession and hasn’t gained much steam since.

“People aren’t willing to take a chance and take a new job and create an opportunity for someone else,” Lawrence Katz, an economics professor at Harvard University, told the Journal.

Quitting, the Journal report said, is “a critical element of a flexible labor market, freeing up jobs that can be taken by new graduates, unemployed workers or employees of other companies — whose departments, in turn, create job openings.”

It continued: “When people cease to change jobs, the system grinds to a halt.”

Surely this is affecting the recruitment industry. Without a fluid flux of talent moving between jobs, recruiters are tasked with drawing from a smaller pool for talent. That means some of the largest talent pools recruiters are forced to draw from are the unemployed or new college graduates — and these would-be workers might not have the skills talent managers are seeking.

In some instances, the slow rate of churn may be forcing some companies to rein in their recruitment efforts for some positions altogether.

The Journal article tells the story of Doug Tibbetts, chief executive of sports apparel maker Boathouse Sports. He said that for some of his managerial positions he is looking to fill, he’s prone to opt for filling it with an internal candidate as opposed to going with an outside hire.

Filling a position internally isn’t entirely a desperate move; most companies evaluate internal candidates for openings before looking for an outside hire.

However, Tibbetts also said even when he is looking to fill a role with an outside hire these days, he’ll move slowly to save a few months’ salary before filling the position. Interesting.

What do you say, all my recruiter friends? Have you found this to be a barrier? Or are there other elements at work as well? fkalman@talentmgt.com.