Job Study: Education, Experience No Guarantee of Job Security

A recently released Bureau of Labor Statistics report shows that even experienced workers are unlikely to work in the same position for more than five years.

The National Longitudal Survey reports that half of employees over 40 are out of a job in less than two years (or held the same position for more than a year), and 69 percent were out of a job in five years. The survey, started in 1979, tracks a cohort of 9,964 employees who were born in the years 1957 to 1964 and who are now between 45 and 53.

Comparing the surveys reveals even less job security and more job mobility starting in 1998: in 1979, 82.9 percent held a job for at least a year while in 1997 only 13.8 percent did. In 1979, most of those under 24 held a job for more than four years; in 1997 only 10.7 percent did.

According to the 1979 survey, education today offers little guarantee against job insecurity, even for the most experienced workers: the survey reports that those over 40 with a Bachelor’s degree or higher face the same job instability as they did when they were in their mid-thirties. 

Workers over 40 are usually at their peak of job experience and employers normally would value these workers the most. In a healthy economy, therefore, such workers would be the ones with the highest job stability and lowest mobility. But the data show that a majority of these highly experienced workers must switch jobs, a significant majority of them lasting less than five years in any one position. This implies that employers are unable to pay for the premium of experience or education.

Workers over 40 should also be seeing an increase in pay, given their experience—this would be especially true for workers who are also highly educated. But earnings data reveals a wage decline. In comparison to their younger selves, those over 40 saw a decline in average wages, a result that holds even for those with a Bachelor’s degree or higher. In fact, earnings data show that members of the 1979 cohort saw the highest wage gains in their mid-20s, a finding that is also true of those with a Bachelor’s degree or higher, though those with more education saw smaller wage declines than those without.

Why are wages stagnant and job security threatened? Offshoring of jobs is one explanation. But so is inshoring, or the increase in competition from workers arriving under various high-skilled visa worker programmes. While officially the U.S. government issues a fixed number of 85,000 such visas, the exact number of actual workers who enter the country is unknown due to the lack of accurate data. Some estimates however place the numbers of workers who arrive on H1-B visas to be as high as 650,000. According to Computer World, the number of H-1B workers more than displaces the 241,000 of the unemployed in the same occupations. It is also through such programs that companies can replace their older workers with younger ones. An AFL-CIO study reports: “Analysis by the GAO revealed that in 2008, among approved H-1B beneficiaries, 83 percent of systems analysts, programmers, and other computer-related workers were under the age of 35. Similarly, 73 percent of electrical and electronics engineers were under the age of 35 in 2008.”

The reason why those who are highly educated and most experienced have experienced the same level of job uncertainty as they did in their mid-30s even after they age past 40 is simple—the amount of competition for jobs has increased. This increased competition in the labor market also reflects the greater job insecurity for those in the 1997 cohort. Not only are jobs being shipped out, workers from abroad are being shipped in. Experienced employees now face potentially unlimited number of competitors—or whatever the actual number of H-1B visa holders actually happens to be—which, in turn, causes employers to become more picky. Whereas before globalization, employers had little option but to hold on to their experienced workers, today they can hire experienced and often younger workers essentially on demand thanks to programmes like H1-B. If foreign competition eats away at the profits of domestic companies, competition from workers arriving on visa programmes eats away at the job security and ultimately the standard of living of domestic workers.