Worker confidence is boosted by increased job security in the current tight labor market.
By Larry Basinait
The Worker Confidence Index (WCI) for the second quarter of 2018 declined by 2.8 points, reversing a prior trend of consecutive quarterly increases. The WCI now stands at 104.3 (see Figure 1). Of the four components of the WCI, only job security increased, up by four points to 104.0. Likelihood of promotion decreased the most, down by 9.9 points. Likelihood of a raise and trust in company leadership indices also declined for the quarter. However, all four indices remain higher than they were one year ago.
Workers remain secure about job stability. Historically low unemployment may be supporting job security. In the second quarter of 2018, the job security index increased to 104.0. Concern about job loss is the most important indicator in estimating worker confidence about their current and near-term financial outlook.
Females reported increasingly higher levels of confidence in their job security than males again in the second quarter of 2018, continuing a two quarter trend. Women historically report higher levels of job security than males. The percentage of males who felt that they would lose their job significantly decreased in the second quarter of 2018, dropping from 14.3 percent to 10.9 percent. This marks the second consecutive quarter of less concern about job loss.
Despite increased confidence in job security, slightly fewer study participants felt it likely that there will be a raise of at least 3.0 percent after their next review. While females continued to feel more secure about their positions than males, they also felt less likely to get a raise (23.3 percent versus 33.9 percent respectively). In terms of age, study findings again show in the second quarter of 2018 that as employees get older, more and more feel that what they make today is what they will make tomorrow.
The belief in the likelihood of a promotion follows a similar pattern to optimism about a raise. The likelihood of promotion index also fell, down 9.5 points, with males feeling a promotion is more likely than females. Respondents with annual incomes of more than $75,000 felt the most optimistic about the likelihood of promotion.
Trust in company leadership declined again in the second quarter of 2018, although it has been the same or over the base index of 100 in six of the last seven quarters. Most employees don’t trust their leadership to make sound decisions for the company. As distrust increases, company performance declines. There is a negative impact on employee morale, engagement, and productivity.
The WCI has correctly predicted the direction of consumer confidence for the next quarter’s end in 11 of 13 quarters. The decrease in the WCI in the second quarter of 2018 suggests that there will be a decrease in the Consumer Confidence Index at the end of the next quarter.
Despite areas of concern, worker confidence remains high, driven by job security likely stemming from a very low unemployment rate, which was 4.0 percent at the end of June. Overall, workers feel somewhat more confident about their work situation than they did one year ago.
