Overall worker confidence declines amid market uncertainty.
By Larry Basinait
The Worker Confidence Index (WCI) for the fourth quarter of 2018 decreased by 0.3 points. It now stands at 107.1, up by 2.6 points on a year-over-year basis from the fourth quarter of 2017. The four indices that comprise the worker confidence index reported mixed results in the fourth quarter. The job security and likelihood of raise indices both increased for the quarter, while the likelihood of a promotion and trust in company leadership both declined. For the year, three of the four indices were higher, with only trust in company leadership in decline.
Workers continue to remain very secure about job stability. In the fourth quarter of 2018, the job security index rose over 1 point to an all-time high of 105.2. 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 fourth quarter of 2018, continuing a trend. Women historically report higher levels of job security (less fear of job loss) than males. The percentage of males who felt that they would lose their job continued to decrease in the fourth quarter of 2018 to 10.3 percent from 10.5 percent in the prior quarter, which was also the fourth consecutive quarter of lower concern about job loss.
Worker perceptions about the likelihood of a raise increased by 1.1 percentage points for the year. Both males and females continued to feel more confident about getting a raise, as 35.4 percent of males and 23.6 percent of females anticipated a raise of at least 3 percent at their next review. In terms of age, study findings again show in the fourth 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 fell in the fourth quarter, but is still up 5.3 points year-over-year. The likelihood of promotion index declined 1 point from last quarter, with males feeling a promotion is more likely than females. Respondents with annual incomes between $75,000 and $100,000 felt the most optimistic about the likelihood of promotion, with over one-quarter (25.8 percent) believing a promotion was likely.
Trust in company leadership dropped in the fourth quarter of 2018, and now stands at 103.3. The decline in trust as measured by the WCI took place in November and December of 2018, amidst dramatic stock market declines. 2018 was a bad year for stocks, suffering from extreme volatility. December was a particularly dreadful month: The S&P 500 was down 9 percent and the Dow was down 8.7 percent—the worst December since 1931. In one seven-day stretch, the Dow fell by 350 points or more six times according to CNN. For the year, the S&P 500 fell 6.2 percent, the Dow dropped 5.6 percent, and the Nasdaq Composite shed 3.9 percent, marking the worst annual performance for all three since 2008.
This decline had to have a negative impact in worker confidence, particularly in the fourth quarter of 2018. But this decrease experienced at the end of 2018 may be short term, and early returns in 2019 support that. There was no underlying economic factor in the decline last year, though political unrest and changing U.S. Congress may have led to uncertainty, which always has a negative impact on the stock market.