The most recent study shows that confidence in job security declined sharply, but trust in management remains high.
By Larry Basinait
The results of the worker confidence index (WCI) report for the first quarter of 2020 and April are largely consistent with the widely reported economic impact being felt in the U.S. By mid-April, jobless claims exceeded 22 million, the highest since 2009. In the first quarter of 2020 (see Figure 1), the WCI decreased by 1.8 points from the fourth quarter of 2019 to 112.4, marking the second consecutive decline. However, the index remained higher than the first quarter of 2019, as the impact of COVID-19 was only beginning to make its mark during the time the survey was fielded. Preliminary April results show a very different scenario, with the WCI for the month falling to 94.3, by far the lowest since study’s inception.
In the first quarter, three of the four indices that comprise the WCI declined—only the trust in company leadership index increased by 2.1 points (see Figure 2). When comparing the month of April with March, the WCI declined 15.5 points while job security, belief in a promotion, and a belief in a raise all fell between 13 and 20 points.
The only component of the WCI that resisted the downward trend was the trust in company leadership index. In April, the trust index was 113.3, almost identical to January and a very modest decline from March. This result suggests that company leaders are largely communicating effectively with their workforce and enabling workers to conduct business from their homes where feasible. Companies are successfully finding ways to keep operations running. For example, about 70 percent of small businesses have applied for loans that could be received under the Cares Act.
In the first quarter of 2020, job security fell by 4.1 points, resulting in the lowest levels of security reported since the study’s inception. But more telling was the decline that was reported in early March. The job loss index declined 5.4 points during the month, followed by an even sharper decline of 12.9 points in April. Concern about job loss is the most important indicator in estimating worker confidence about their current and near-term financial outlook.
Females again reported higher levels of confidence in their job security than males in the first quarter of 2020, consistent with the historical norm. However, both genders felt more concerned about losing their jobs when compared to the last quarter of 2019. Men, specifically, feel the lowest job security in the history of the study.
Workforce data from the Bureau of Labor Statistics (BLS) remains consistent with negative job security study findings. By the end of the first quarter of 2020, there were 1.2 percent fewer workers than at the end of the last quarter of 2019, bringing the total number of people in the U.S. workforce to 117.18 million. This is a decrease of more than 1.3 million workers over the span of one quarter.
The belief in the likelihood of promotion index also declined in the first quarter to 114.8, a drop of more than 10 points from the fourth quarter of 2019. While males’ confidence dropped slightly, the decline was mainly from females, with only 18.2 percent indicating they anticipate a promotion in the next 12 months. Those under age 45 were the most inclined to anticipate a promotion compared to other age groups in the first quarter of 2020, as were those with the highest household income, exceeding $100,000. No other component of the WCI has declined as much as the likelihood of promotion since January.
Worker perceptions about the likelihood of a raise declined by 10.5 points in the index. Just over one-quarter (27.1 percent) of survey respondents felt they would get a raise of at least 3 percent for the quarterly average. Males remained significantly more likely than females to anticipate getting a raise, 34.5 percent versus 21.3 percent, respectively. The discrepancy between genders of 13.2 percentage points is the largest since the study’s inception.
Looking at the 2020 results to date, the impact of the COVID-19 pandemic is most clearly visible in April, though the WCI has declined in each month of the year (see Figure 3). Other than trust in company leadership, every other area examined declined dramatically in April, with the likelihood of a promotion and the likelihood of a raise indices both down by about 20 points. Trust in company leadership held steady, down by less than 2 index points.