What factors do workers consider when changing jobs?

What characteristics do jobseekers consider when switching jobs? Even though the pay and benefits of a job are an important factor, workers also consider opportunities for advancement, physical demands, work-life balance, COVID-19 policies and risk exposure, and interest in the job duties. In the article, “What makes a job better? Survey evidence from job changes,” (Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System, February 2024) Katherine Lim and Mike Zabek analyze how job characteristics, beyond pay, attribute to overall job quality and satisfaction.

The authors use data from Survey of Household Economics and Decisionmaking from 2021 to 2022. They find that changing jobs was more common in 2022 than in 2021 (15 percent versus 11 percent). Lim and Zabek also note that job changers tend to be younger and that people with lower family income or higher educational attainment are more likely to switch jobs.

Among those surveyed, 70 percent of job changers found that they were in a better position after changing jobs. A slightly lower 60 percent of job changers had improvements in pay or benefits, and 54 percent had a greater interest in their work. However, only 43 percent of respondents in this sample found an improvement in their work-life balance. The authors find that job changers consider interest in the work very crucial. If respondents felt that there was more interest in the work, 90 percent of job changes led to more satisfaction. In contrast, only 20 percent of job changers who were less interested in their work perceived their new job as better overall.

When looking at different demographics, the authors find that working parents value a better work-life balance from a new job than nonparents do. Younger workers also value an increase in pay and benefits more than older workers do. Lim and Zabek also find that improvements in work-life balance are more indicative of job quality improvements for some workers than they are for others. For workers with a high school education or less, a better work-life balance was indicative of a higher quality job. In contrast, workers with at least a bachelor’s degree had a weaker connection between improved work-life balance and improved job quality, and they value opportunities for advancement more than having more interest in the work.

All these different factors and correlations between groups and benefits suggest that only looking at one characteristic will understate the differences in job quality. By surveying and analyzing job changers, the authors demonstrate which characteristics workers value directly rather than trying to infer preferences from hypothetical scenarios.