What makes a job better? Survey evidence from job changers

When workers change jobs, they may find themselves faced with numerous questions: How is the healthcare coverage? Will I be able to pick up my kids from school? How long before a promotion? Because workers value characteristics of jobs beyond their paychecks, differences in job quality cannot be measured by wage differentials alone. However, limitations in available data have led to a focus on differences in determinants of wages and salaries that obscures the role of other job characteristics in determining job quality.

In this article, we use survey data from the Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED) to analyze how changes in monetary and nonmonetary job characteristics relate to workers’ assessment of their new job’s overall quality. Specifically, we use new survey questions asked of individuals who changed jobs to see (1) whether the respondent said that the overall job was better, the same, or worse than the respondent’s previous job and (2) how the change in self-assessed job quality relates to other self-assessed changes in pay and benefits, opportunities for advancement, the respondent’s interest in the work, the physical demands of the job, and the work–life balance associated with the job.

We test the relative importance of job characteristics by assessing how well changes in a single, self-assessed job characteristic predict changes in self-assessed overall job quality. First, we show how accurately changes in each characteristic summarize changes in overall job quality. Predicting overall job quality using only that characteristic gives an assessment of how accurate it would be to make assessments using only that characteristic, as is commonly done using measures of workers’ pay. Second, we estimate a linear probability model to show how much more likely a respondent is to say that their new job is better conditional on a change in a particular characteristic, holding the others fixed. Finally, we examine the correlations in changes between job characteristics.

We find strong evidence that workers value characteristics beyond pay and benefits in evaluating their new jobs, although pay and benefits remain important predictors of job quality. Predicting whether a worker considered a job was better or not using only changes in pay and benefits gives an incorrect inference 30 percent of the time. Interest in the work is particularly predictive of a worker’s assessment of overall job quality, even after controlling for changes in pay and benefits. Holding other characteristics fixed, an improvement in a worker’s interest in the work is associated with a 27-percent increase in the likelihood of the employee considering the job to be better overall. For pay and benefits, the increase is smaller, at 19 percent. Work–life balance is also highly predictive, with improved work–life balance being associated with an 18-percent increase in the likelihood of an employee considering the job to be better.

Across demographic groups, the changes in characteristics that most affect overall assessments of job quality are similar, but we do find evidence that characteristics vary in predicting overall job quality for different subgroups. Changes in work–life balance are around 50 percent more predictive of overall changes in job quality for women than for men. However, our results are too imprecise to detect if changes in work–life balance are meaningfully more predictive of overall changes in job quality for parents. Also, the results show that improvements in pay and benefits are more associated with overall self-assessed job quality improvements for job changers over 45 years of age. Finally, for older job changers, changes in interest in the work are particularly predictive of overall self-reported job quality compared with younger workers.

The correlations between changes in job characteristics are stronger for workers with lower levels of education compared with workers with a bachelor’s degree or higher. Improvements in pay and benefits stand out with a robust, positive correlation with improvements in other characteristics for workers with a high school education or less. The weaker levels of correlation in job characteristics for more educated workers suggest that improvements in pay and benefits tend to accompany improvements in work–life balance, opportunities for advancement, and interest in the work to a greater degree among workers with a high school education or less relative to workers with a bachelor’s degree or higher. The correlation results suggest that pay and benefits changes for less educated job changers understate the overall change in self-assessed job quality compared with job changes for workers with a bachelor’s degree or higher.

The survey questions we use were added to the SHED in 2021, and this article presents results through 2023, a period when labor markets were relatively tight and inflation was higher than in previous years. Analyzing responses since 2021 illustrates the importance of other job characteristics in determining changes in self-reported job quality, when workers had more bargaining power to determine working conditions, pay, and benefits. Employers may also have been making tradeoffs between pay, benefits, and other job characteristics to attract workers, while maintaining profitability, while other input prices were increasing.

There are several advantages to surveying job changers. The first is being able to ask simple and understandable questions. Individuals who change jobs may be able to more easily compare their overall job satisfaction and how specific characteristics in their new job compare to those in their old one. In a survey, we can ask respondents about each characteristic directly, as opposed to trying to infer changes indirectly or asking respondents to assess their job’s quality relative to alternative jobs, the knowledge of which is likely to depend on their personal experiences. The second is that we examine workers’ preferences about jobs that they actually moved to, which allows us to go beyond hypothetical comparisons. Third, job changers are a particularly relevant group, as they are the individuals actively comparing jobs. Hence, they are most likely to have their decisions affected by any job-quality shifts. Lastly, by focusing on job changers, we are also able to analyze actual changes in particular characteristics for the same worker.

In contrast to work surveying all workers or asking about hypothetical job changes, SHED data represents individuals who change jobs, and these individuals may differ from workers more generally in both observable and unobservable ways. In addition, by focusing on job changes, we identify differences in characteristics between jobs among job changers, rather than levels of satisfaction with characteristics. Finally, changes in job characteristics are being evaluated after a job change and are subjective. These assessments could be overly positive if they are affected by confirmation bias, where the worker is more likely to say the job is better to justify their decision to switch, or overly negative if they are focused on negative characteristics of their current job, which are more salient than the downsides of their previous position.

The most direct antecedents in the literature are studies asking workers about job characteristics, both actual and hypothetical. Previous research has used surveys of workers to collect information about job characteristics and workers’ willingness to pay for job characteristics based on hypothetical job choices. Similarly, other work has estimated job quality based on workers’ evaluations of job characteristics combined with a directly elicited rating of the importance of the characteristic to the worker. In contrast, we draw conclusions about individuals who are on the margin between two different jobs, since we observe them changing jobs. This approach blends the existing survey literature with studies of job search behavior.

This work also provides additional evidence contributing to the broader literature about the importance of nonmonetary job characteristics. This literature suggests that a substantial proportion of job quality is due to characteristics other than pay. There is also a strong public policy interest in the concept of measuring workers’ job quality as this knowledge can inform the creation of policies that promote “good jobs.”