“People are opting increasingly for predictability, stable income and stable benefits over potentially promising prospects at a new job,” said Matt Terry.
The Federal Drive with Terry Gerton provides expert insights on current events in the federal community. Read more interviews to keep up with daily news and analysis that affect the federal workforce. Reach out to Terry and the Federal Drive producers with feedback and story ideas at FederalDrive@federalnewsnetwork.com.
Interview transcript
Terry Gerton Matt, I’d like to start with you. This new research out for the Economist Group talks about the quit rate. We talk about the unemployment rate, we talk about a lot of labor metrics. What is the quit-rate, and why should we be paying attention?
Matt Terry Yeah, so the quit rate is the rate of people quitting their jobs basically. And that rate has actually fallen to a low that it’s been the lowest in probably the last decade. So workers are not leaving their jobs as frequently. They’re kind of job hugging is what we’ve called it in the research at unprecedented levels. And it’s not always because they love their jobs. We see economic turbulence going on right now, hiring freezes, increased redundancies with the rise of AI. There’s just a lot of uncertainty going on and people are increasingly opting for predictability in their employment, stable incomes and stable benefits. So, people are opting increasingly for predictability, stable income and stable benefits over potentially promising prospects at a new job. So they’re less likely to jump from job to job and more likely to just hold on to what they’ve got. We found in our survey that 62% of respondents said in that sort of trade-off, they would choose long-term job security over higher pay. So we really see kind of a trend setting in that we’ve labeled the ‘Great Stay’ where people are just sticking in their jobs.
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Terry Gerton In a healthy labor market, what would you expect that quit rate number to be?
Matt Terry It’s traditionally been a little bit higher than it has been. I don’t have the exact figure with me right now, but I think it’s around 2% right now. So quite low. And one thing we find is that in the last five years, our respondents have stopped job searching, specifically due to the fear of losing that security. So we found 30% have reported stopping their job searches and half say they have done that within the last 12 months. So rising insecurity is really kind of on the increase and happening across the board.
Terry Gerton Brendan, what thoughts do you have about the quit rate?
Brendan McCarthy We definitely see it here, you know, as a hiring manager and a competitive industry, I’m always trying to recruit top talent. And sometimes I’m successful. And a lot of times lately people do not want to leave their their job security. And I think some of that has to do with, if you think of the environment that we came out of — so we’re, I don’t know what we are, five or six years now out of the pandemic. And that was a major shift and a lot of people took career risks during the pandemic and some of it, you know, they might’ve gotten used to what was a virtual environment for a short time being that came back to normal. And I think we all probably know of people that took a major career change back then. A lot of those might not have paid off in the long term, you know, so I think a lot us know people that might’ve been displaced and then try to re-enter a thriving economy, but also in an inflationary period with increasing costs of living and may have ended up in a difficult position financially, and I think a lot of people, you know, are trying to avoid that now. So, I think that that plays in a little bit to the psyche of employees that they really do value job security. They will pass up on a greater opportunity to go into a new firm, just if they feel secure and comfortable in their job and they know their paycheck is dependable. They are a lot of times passing on opportunities and just staying where they feel comfortable and secure.
Terry Gerton Well, Matt, let me come back to you, speaking about uncertainty and job security. Let’s talk about the subset of your respondents that are from the federal government. Those folks have gone through a lot of uncertainty over the past 18 months or so. What does the data tell you about how they’re perceiving job security, mobility, and their quit rate?
Matt Terry Yeah, so we don’t have a quit rate statistic, I don’t think, for government employees specifically, but our survey was conducted late 2025, so, you know, right at the tail end of a lot of federal layoffs and a lot of uncertainty going on there. And we did see strong trends among government workers for prioritizing job security. We asked a question of them: what keeps them working in government? What are the biggest factors for why they stay? And job security was the number one on that list. I think 60% of respondents marked that among their top choices. So it is top of mind, although at the same time, government employees do express some of the least fear of losing job security. Perhaps that’s just the nature of their work and the jobs that they’re in. But yeah, some interesting trends there definitely in the data.
Terry Gerton I’m speaking with Brendan McCarthy, he’s the head of retirement investing for Nuveen, and Matt Terry is research manager for the Economist Enterprise. Brendan, let me come back to you because there’s some data in this survey about retirement planning. So, we’re talking about job security, but in this turbulent kind of environment, you mentioned inflation, some other things, are people delaying retirement? And if so, what are they thinking about when they’re thinking about retirement planning?
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Brendan McCarthy Yeah. And unfortunately, people are delaying retirement. We’re seeing delays in retirement, even in the government sector that we just talked about. People are delaying retirement up to three years. It’s four years or longer in the private sector. So they’re delaying in retirement because they are seeing this as a couple of major contributing factors. One is this increased cost of living. So they’re seeing the increased cost of living. But to add to that, they’re living longer. So if you take a 65-year-old today, which is the number you should be looking at, you shouldn’t be looking at general U.S. Life expectancy, you should looking at 65-year-olds. A 65-year-old today has a 25% chance of living to age 95 or longer. So in fact, a 65- year-old couple, there’s a 46% chance that one of the two of them will live to age 90 or longer, so now people are living 30 years or longer in retirement and unfortunately what’s happened is guaranteed income has all but gone away in the private sector. So, a generation ago, go back 30, 40 years ago, 70% of American workers who had access to a workplace retirement plan in the private sector were in a DB or pension plan. Those have gone away, that number’s down to 11% today. So most are in a 401k plan and we have this new generation of workers retiring predominantly without any form of guaranteed income other than their social security, which we know is not enough. And so they’re feeling very insecure approaching retirement. And as such, you’re dealing with this new, It’s a common term out there, the reluctant retiree. That, you know, for corporations in particular, that can have a heavy toll on the bottom line because you are increasing, it’s a dramatic, you can talk to any CFO, it’s a very dramatic effect on workforce costs when people delay their retirement one, two, three, three years and longer. So it’s not great for the company, it is not great for the individual either. You want them to be able to retire on time and not feel like they should be able to work up and through their expected retirement date. That all comes down to retirement security. You know, I’ll go on for this just a quick, you know, what do they do? There is fortunately, this is heavily recognized down in Washington. So there’s a lot of work going on in Washington to bring guaranteed income back to retirement plans. And there’s been a number of bills passed already. And in fact, there’s a number of them floating around that will propose actually requiring retirement plans to have a guaranteed income option for employees so that the American worker can now work up to their retirement and then feel that they have a secure retirement. You can actually get that pension, you can get that guaranteed income that is associated with a pension, which has gone away for most Americans. You can now actually get through your 401k plan. So there’s products that have come to market and there’s legislation that’s been passed that enable your workplace to find contribution plan, whether it’s a 401k, 457 or 403b, it can now have an option of guaranteed income. So what was historically a savings, just a retirement savings plan, can now also be a retirement income plan for the American worker.
Terry Gerton Matt, let me come back to you. You mentioned a term up at the beginning of this conversation, job hugging. It used to be sort of an article of faith that if you wanted to progress in your career, you were eventually gonna need to move somewhere, take a different job, maybe change companies. If people are hugging their current job and they’re not making those kinds of moves, what’s the long-term implication for that in terms of career advancement, increased salaries, job progression?
Matt Terry Right, no, it’s definitely a big concern. Obviously with people less likely to jump from job to job, pursue those traditional career development pathways, there is a risk for them that they kind of remain locked into certain situations. And so it’s a trend that we’re keeping a close eye on in the research. I mentioned a stat earlier that 60% of government employees are prioritizing job security at the moment as one of the reasons why they stay where they are. Along with that, just 22% said that opportunities for professional development or training are keeping them in their jobs. So it’s much lower on the priority list and maybe an area that should be looked into a little bit more as something that can be implemented to help these workers who need those career opportunities.
Terry Gerton Brendan, let me come back to you. Let’s think about policy lessons that you take from this data. You talked about one, which is recreating the opportunity for more fixed income structure in retirement. Are there other policy lessons you’d want folks to take from the data in terms of workforce management or workforce incentives or the benefit compensation structure?
Brendan McCarthy You know, I think the key thing is benefits matter, you know, and they’re mattering. The pricing on benefits has changed. They matter more now to employees than they did a generation ago. We are seeing all sorts of signs of workers choosing jobs for lower pay because of a better benefit package. And I think, you know, primarily amongst the benefit package is the retirement plan. If you think of government sector, we talked about that being one of the most insulated sectors, historically. we talked about job security, which was key. You know, people feel secure in government jobs, or historically have, I should say. They also knew their retirement. So they knew they worked a certain amount of years because government jobs historically have had pensions. They knew what was coming to them in terms of retirement and that provided them with security. And that, unfortunately for the private sector, that has gone away. So I think in terms policy reform, there has been an unprecedented amount of retirement policy reform already. There was the Secure Act of 2019 and then there was the Secure 2.0 Act a couple of years ago. There is already work on a version of Secure 3.0 going on down in Congress. So you’re going to continue to see that retirement policy reform, but a lot of it is geared towards. In particular, that fact that pensions have gone away in America for the majority of American workers, guaranteed income is no longer something they can count on in retirement. And Washington wants to see that come back. I’ve seen estimates of upwards of three or four trillion that would fall back onto social services if, you know, we have this volume of people, which EBRI — I’ll give you one statistic. The Employee Benefit Research Institute is now estimating that upwards of 40 percent of American households are at risk of running out of income in retirement. So it’s a real risk and Washington’s aware of it and it is one of those issues that does fortunately have bipartisan support and they have been moving on it and I think you’ll continue to see that retirement reform so that for the American worker in the future and a lot of it is starting now. A lot your companies can get these products now but Washington will help mandate. You know, we feel that Washington’s heading towards a where they will require your workplace retirement plan to provide you with that option of guarantee, easily converting that hard-earned retirement savings into guaranteed income.
Terry Gerton And Matt, last question to you, does this data change what’s maybe been the conventional wisdom about the federal worker willing to settle for lower pay because of a better benefits package and a dedication to the mission? Does this tell us they’re getting more salary sensitive?
Matt Terry It’s possible. There are some signs in our data that show government workers are maybe more likely to prioritize pay in certain cases. So times are changing. The stability that was once, you know, very common in government jobs may not be as common anymore. But yeah, it just goes to show that workers have very changing priorities.
Terry Gerton I’m most interested, this administration seems to think that hiring government workers is a very elastic labor market. And I think that’s kind of counter to conventional wisdom, like, oh, well, if we lose 300,000, whenever we want more, we can just hire more.
Matt Terry Yeah, I don’t wanna speculate too much on what the administration’s doing, but there are obviously a lot of risks in making big workforce decisions like that that affect a lot people. People feel a tie to their jobs and they need some baseline level of security. And if they don’t get that, we definitely see their willingness to prioritize benefits, prioritize different things that they need to fit their changing situations.
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Terry Gerton is host of the Federal Drive and has been working in or with the federal government for more than 40 years.
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