Worker confidence is boosted by increased job security in theÂ current tight labor market.
By Larry Basinait
The Worker Confidence Index (WCI) for the secondÂ quarter of 2018 declined by 2.8 points, reversing a priorÂ trend of consecutive quarterly increases. The WCI nowÂ stands at 104.3 (see Figure 1). Of the fourÂ components of the WCI, only job security increased,Â up by four points to 104.0. Likelihood of promotionÂ decreased the most, down by 9.9 points. LikelihoodÂ of a raise and trust in company leadership indices alsoÂ declined for the quarter. However, all four indicesÂ remain higher than they were one year ago.
Workers remain secure about job stability. HistoricallyÂ low unemployment may be supporting job security.Â In the second quarter of 2018, the job security indexÂ increased to 104.0. Concern about job loss is the mostÂ important indicator in estimating worker confidenceÂ about their current and near-term financial outlook.
Females reported increasingly higher levels ofÂ confidence in their job security than males again in theÂ second quarter of 2018, continuing a two quarter trend.Â Women historically report higher levels of job securityÂ than males. The percentage of males who felt thatÂ they would lose their job significantly decreased in theÂ second quarter of 2018, dropping from 14.3 percent toÂ 10.9 percent. This marks the second consecutive quarterÂ of less concern about job loss.
Despite increased confidence in job security, slightlyÂ fewer study participants felt it likely thatÂ there will be a raise of at least 3.0Â percent after their next review.Â While females continued toÂ feel more secure about theirÂ positions than males, theyÂ also felt less likely to get aÂ raise (23.3 percent versusÂ 33.9 percent respectively). InÂ terms of age, study findingsÂ again show in the secondÂ quarter of 2018 that asÂ employees get older, moreÂ and more feel that what theyÂ make today is what they willÂ make tomorrow.
The belief in the likelihood of aÂ promotion follows a similar patternÂ to optimism about a raise. The likelihood ofÂ promotion index also fell, down 9.5 points, withÂ males feeling a promotion is more likely than females.Â Respondents with annual incomes of more thanÂ $75,000 felt the most optimistic about the likelihood ofÂ promotion.
Trust in company leadership declined again in theÂ second quarter of 2018, although it has been theÂ same or over the base index of 100 in six of the lastÂ seven quarters. Most employees donât trustÂ their leadership to make sound decisionsÂ for the company. As distrust increases,Â company performance declines. ThereÂ is a negative impact on employeeÂ morale, engagement, andÂ productivity.
The WCI has correctly predictedÂ the direction of consumerÂ confidence for the next quarterâsÂ end in 11 of 13 quarters. TheÂ decrease in the WCI in the secondÂ quarter of 2018 suggests that thereÂ will be a decrease in the ConsumerÂ Confidence Index at the end of the nextÂ quarter.
Despite areas of concern, worker confidence remainsÂ high, driven by job security likely stemming from aÂ very low unemployment rate, which was 4.0 percent atÂ the end of June. Overall, workers feel somewhat moreÂ confident about their work situation than they did oneÂ year ago.