The world of work has been in flux for years, but the pace of change since the pandemic has accelerated dramatically. Hybrid work, AI-driven automation, and shifting employee expectations are redefining the employer–employee relationship. Today, work isn’t just about a paycheck; it’s about purpose, flexibility, and well-being. 

Changing demographics tell only part of the story 

Baby Boomers, who have long had an outsized impact on the U.S. labor market, have been retiring in record numbers, although the trend may be shifting somewhat post-pandemic. Boomers had fewer children than their parents, so there are fewer Gen Xers and millennials to replace them. Worker shortages, longer life expectancies, the need to make ends meet, or recently enacted financial incentives to work longer are encouraging some Boomers to put off retirement and work later into their 60s and 70s. 

Paychecks play a key role, too. Recent data from the US Bureau of Labor Statistics reports that inflation-adjusted earnings for the youngest boomers (those born between 1957 and 1964) have flatlined over the past 20 years, after they turned 45. If the past is prologue, we should take careful note that salaries for this group increased the quickest between the ages of 18 and 24, when hourly wages went up an average of 6.5% per year. After that, the earnings growth rate slowed between the ages of 25 to 34 (+3.3% per year) and from ages 35 to 44 (+1.8% per year).  

There is reason to believe that the high salaries of today’s younger workers could follow a similar pattern, causing a large percentage to seek multiple job opportunities before reaching mid-career to optimize their earnings.  

Job hopping is a growing trend for younger workers 

Gen Zers and younger millennials are job-hopping more frequently to increase salary and skills earlier in their careers. In fact, although it’s always been a red flag for employers, job-hopping is now the top concern for more than three out of four hiring managers, according to HR consulting firm Robert Half.  

Optimism over employment prospects led 22% of workers age 20 and older to spend a year or less in their jobs in 2022, according to EBRI, and about 33% spent two years or less at their jobs. Perhaps more notable is the fact that 74% of 18-to 26-year-olds and 62% of 27- to 42-year-olds were searching for a new job or planned to search in the next six months, according to the Half study. A combined whopping 49% of American workers of all ages planned to look for a new job as of Q3/Q4 2023, extending a trend that started during the COVID-19 pandemic. 

So, what’s driving this relentless desire for greener pastures among employees? Is it something more fundamental than higher pay and better benefits? 

Evolving relationship between workers and employers 

Some employment experts say one reason for the spike in job-hopping is an erosion of the social contract between companies and employees. Their view is that repeated, recession-related layoffs have, in some cases, led to “right-sizing” in anticipation of economic downturn. But this interpretation masks an important point: Today’s employers are less concerned about having access to talent than about motivating and keeping workers happy. Well-being and professional development are top-of-mind for both employees and hiring managers. 

According to Robert Half, the three top motivations for U.S. workers to find new employment opportunities today include higher salary (55%), better benefits and perks (38%), and remote work options (28%). But we also found an interesting trend that confirms how workers’ needs have evolved: According to global human capital firm Mercer, workers increasingly say they want to work “with” a company, not “for” a company. Aligning work with personal values is a powerful motivator for employees, and employers who adapt well to employees’ changing needs are better positioned to win the war on talent.  

So, as Mercer’s research bears out, for much of the 20th century, there was a “Loyalty” contract between employees and employers, whereby employers met basic needs such as steady pay, benefits, and job security in exchange for employees’ commitment that often lasted their entire careers. Then, pre-pandemic, the social contract evolved to be more focused on an “Engagement” contract, where employees’ psychological needs for achievement, camaraderie, and equity rewards were exchanged for employee contributions and effort. The new chapter of work is being organized around the “lifestyle” contract, whereby employees’ needs for healthier physical, mental, emotional, and financial well-being are being met by employers who are seeking sustainable business performance. 

What lies ahead in the changing world of work? 

The evolution toward a lifestyle social contract raises lots of questions with no clear answers (and we haven’t even raised the specter of AI’s anticipated impact on the world of work):  

• Are workers who seek greater work-life balance as productive or as likely to be considered for promotion and career advancement?
• Will they meet their goals for retiring on their terms?
• Are employers realistic in their demands for workers to return to the office?
• Should employers adopt the new lifestyle contract to ensure that workers reward them with loyalty, commitment, and retention? 

What we can say with confidence is that creating a resilient, comprehensive financial plan helps give you better control over and confidence in your career decisions. By managing day-to-day finances, preparing for the unexpected, getting on track to meet long-term goals, and thinking about what will give you freedom to make choices in life that matter the most to you, you set yourself up to survive and thrive — whatever the world of work looks like in the future. 

This article was originally published by the Brainerd Dispatch here.

 
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  

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