If you’re a parent, sooner or later your children will inform you — as you doubtless you told your parents — that “that’s not the way things are now!” It’s a potent retort to whatever social more is at issue because, whether it involves a choice in dress, curfew or even resume preparation, our perspectives are often shaped — and sometimes distorted — by our recollection of the way things were for us at comparable points in our own past. Or, as we must sometimes admit, “the way things used to be.”
When it comes to things like working careers, there’s a widespread assumption in our industry that past generations worked for a single employer for all or most of their working years, and then retired with a pension and a gold watch. Today things are different, or so we tell ourselves as we talk about the utility of a defined contribution approach, since American workers are believed to change jobs (much) more frequently. In fact, many advisors champion the defined contribution plan design as a better fit for today’s workforce, which, certainly in the private sector, is seen as lacking the kind of tenure necessary to accrue sufficient benefits under a traditional pension design.
As it turns out, however, the latest data on employee tenure from the January 2012 Supplement to the U.S. Census Bureau’s Current Population Survey (CPS) show that the overall median tenure of workers — the midpoint of wage and salary workers’ length of employment in their current jobs — was slightly higher in 2012, at 5.4 years, compared with 5.0 years in 1983.
In fact, as a recent EBRI Notes article points out, the data on employee tenure show that those so-called “career jobs” never really existed for most workers. Indeed, over the past nearly 30 years, the median tenure of all wage and salary workers age 20 or older has held steady at approximately five years. When you focus on trends among older male workers (ages 55–64) — the group that experienced the largest change in their median tenure during the period covered by the report — median tenure fell from a level that would not normally be considered career-length (14.7 years) in 1963 to just 10.7 years in 2012.
Ultimately, when it comes to job tenure trends, [1. The EBRI report, Employee Tenure Trends, 1983–2012, highlights several implications of these trends: the effect on defined benefit accruals (even for workers still covered by those programs), the impact of the lump sum distributions that often accompany job change, and the implications for social programs and workplace stability.] the way things look today is remarkably consistent with “the way things used to be.” However, as is often the case, a closer look at the underlying data highlights that even the things we expect to be different aren’t always different in the ways we expect.
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