A lot of people want to quit their jobs at Verizon, and that’s a really good sign for the economy.
In a drive to cut costs and shift investments as it rolls out 5G service, the company announced on Monday that 10,400 management employees had accepted voluntary buyout deals, out of 44,000 who were eligible.
That might have been partially due to the fact that the terms of severance were generous, at three weeks of pay for each year of service, capped at 60 weeks.
But it’s likely there’s a larger factor at play: The unemployment rate is now 3.7%, compared to 5.8% when Verizon last offered buyouts, meaning those workers figure they have a good chance of taking the money and finding another job.
“The hotter the labor market is, the more likely people are to say, ‘Sure, I’ll take this, thank you very much,’” says Peter Cappelli, director of Wharton’s School of Human Resources at the University of Pennsylvania. “You wouldn’t have had many people taking it in 2009.”
The buyout isn’t the largest in Verizon’s history. In 2003, 21,600 people took a voluntary buyout, with a two-week severance offer that was much less generous than the deal workers are being given now. That package was offered to far more workers — 152,000 — so the overall takeup rate was just 14%, as opposed to almost 24% of eligible workers this time around.
The announcement comes at a time when people are quitting their jobs in record numbers. As a percentage of total employment, the October quits rate released on Monday was slightly down from the previous month, but otherwise as high as it’s been since the Labor Department started collecting data in 2001.
The Bureau of Labor Statistics still counts “voluntary” buyouts as layoffs, so the Verizon employees will go in that category when they leave the company. But the layoffs and discharges rate is nearly as low as it’s ever been, while the rate of job openings has been setting records all year, sending a strong signal to employees that now would be as good a time as ever to try something new.
Of course, not everybody wants to take buyouts in this economy. General Motors got far fewer volunteers than it was hoping for in its latest round, resulting in the announcement last week of 15,000 layoffs in the United States and Canada.
But the GM workers face a more difficult job market, since they’re so concentrated in a few towns, requiring many to relocate for the next job. By contrast, the Verizon workers are distributed throughout the country.
Also, people with management skills and advanced educations likely have better re-employment prospects than unionized autoworkers, who currently have pay and benefits far above the industry average.
But there’s one thing that GM and Verizon workers both have in common: The benefit of the doubt. Laid-off workers often face stigma from employers who wonder whether they may actually have been cut for underperformance, says Cappelli — but workers whose whole plants were shut down fare better, since it’s clear the fate befell everyone, not just the less productive.
The same is true of people who took buyouts rather than getting laid off against their wills.
“A buyout sounds like it was your choice,” Cappelli says.