The Quantitative Case Against Loyalty
I once wrote that loyalty at work is not real. Now, I’ve got the data to prove it.
One of the first articles I wrote for this newsletter was a piece arguing that loyalty isn’t real in the workplace—particularly for coffee workers and others in low-wage or hourly jobs.
The basis of my article was both theoretical and empirical: In many jobs, for example, employers are not required to give notice to employees when they’re terminated, but it has still become customary for workers to provide two-week notices (so much so that we have a whole rom-com starring Sandra Bullock and Hugh Grant centered on the premise). I know for myself how often I’ve been expected to extend grace and care to my employers, only not to receive that same care back.
That uneven workplace dynamic is nothing new. In another piece I wrote about familial language at work—which gets weaponized “as a tactic to avoid giving employees adequate working conditions”—many of the baristas I talked to reflected on similar imbalances in their cafes.
One barista shared a story about their manager: “I was working at a ‘we’re a family’ coffee shop when the manager’s brother died. In the following weeks, she displayed mounting emotional distress. The owner fired her the day before Thanksgiving as she was on her way out the door to go see her actual family.”
Examples like this continue to feed my certainty that loyalty at work isn’t real. But my argument against loyalty received some understandable pushback when I first shared it. One commenter wrote that “loyalty is a two-way street.” Other folks opined to me directly that loyalty is an essential personal virtue, so when workers “jump around” or job hop, they’re saying something to the employer about their character.
However, I’m here today to make a different case against loyalty: a quantitative one. By looking at the numbers, and the changing structure of pension and retirement plans, I can demonstrate that loyalty at work not only isn’t real, but doesn’t make any financial sense—at least for employees.
No Longer in It for the Long Haul
I’ll start with a disclaimer: I’m not writing formal advice here. Money may not be the only factor to consider when evaluating a job (stability, work/life balance, and benefits all matter). And if you have personally gained from your job because you’ve been a loyal employee, congratulations.
Rather, I write this piece because so much of the pushback I see when I challenge assumptions about loyalty come down to mistaken assessments of workers’ characters. Recently, I read a Harvard Business Review piece by Emma Waldman in which she recounts a conversation with an HR colleague. The colleague, “Joy,” dismisses employees she calls “frequent appliers,” or people who have had multiple jobs throughout their careers.
“My conversation with Joy stuck in my mind over the next few weeks, as I was once a job hopper myself,” Waldman writes. “I held four different roles at four different companies before I turned 27. It took me that long to find a job that aligned with my values and where I felt happy at work. I never once considered my decision-making skills or judgement to be compromised.”
So, I wanted to explore how staying with a job or employer became conflated with loyalty in the first place. And then I saw a video from Vivian Tu, @your.richbff.
In the video, she criticizes people who chastise job hoppers, and reminds viewers that older generations often received pensions at their workplaces: If you worked at a job for a certain number of years, the company would essentially fund your retirement. In 1970, about half of all workers had a pension, generally a defined-benefit pension (basically, you get a fixed amount of money paid out to you, which can be based on factors like your salary history and how long you were with the company).
Even if a worker didn’t have a pension, Social Security benefits could cover more of their expenses. Ken Moraif for MarketWatch reports that in 1985, “retirees relied on Social Security for 65% of their income. People could almost live on their Social Security benefits alone.”
The late ’70s and early ’80s are a critical period, because that’s when the 401(k)—or a retirement scheme that moves the onus of retirement savings onto workers rather than employers—took off. For CNBC, Kathleen Elkins gives a brief timeline of the shift from pensions to 401(k)s, spurred by a change in legislation in 1978 “that gave employees a tax-free way to defer compensation from bonuses or stock options,” she writes. Basically, employees could put a portion of their income into a tax-free account for retirement.
Within five years, many employers began shifting to 401(k) accounts. “Companies liked the option because it was cheaper and more predictable to fund than pensions,” Elkins writes. “Employees were attracted to a new savings vehicle that, they were told, could put them in a better position to retire.”
In her reporting, Elkins pulled a quote from Ted Benna, an early proponent of 401(k) accounts. In an interview he did in 2012, he seemed to voice some concern for how 401(k)s have evolved over time: “I knew it was going to be big, but I was certainly not anticipating that it would be the primary way people would be accumulating money for retirement 30 plus years later.”
Benna does point out that defined-benefit pension plans only work for employees who stay with one company for 20–30 years. But it seems like there’s some ideological carryover: In the interview, he talks about how 401(k)s are better for employees who want to switch jobs because the retirement funds travel with the employee1. Arguably, this position is nothing more than a talking point designed to protect the taxed retirement savings industry. However, we cannot claim that employees need flexibility in their retirement plans and still hold onto this antiquated notion that loyalty at a job is essential.
This is especially true given how rare pensions are now. Only 15% of employees have a pension plan now. Meanwhile, the far more popular 401(k) is also far more volatile than its predecessor because it relies on the performance of the stock market. Think back to the 2008 Great Recession, for instance, when individuals lost about $2.4 trillion in retirement funds.
The point I want to make is that loyalty in the workplace is a relic, a value from a bygone era when loyalty garnered an actual reward for workers: Stay here for X number of years, and we’ll take care of you in the future. For most people, this no longer exists.
Not Smart Financially
One might argue that the points above are irrelevant for hourly coffee workers because most small coffee shops don’t have retirement plans (While this might be true, I was curious if that was the case for all hourly jobs. I did a cursory search inquiring if hourly workers in the '60s and '70s had pension plans—I couldn't get a definitive answer, but it looks like some did. The distinction between hourly and salary workers isn't very stark). Perhaps, but workers still have a financial incentive to throw loyalty in the trash.
Anecdotally, I have left every single job I’ve ever had because another employer offered me more money. Turns out, that’s common.
Take a somewhat flashy article in Forbes, which claimed that staying at a job for more than two years meant getting paid 50% less than people who job-hopped. This is hyperbolic to an extent: The author derives that 50% figure from a specific employee who jumped jobs four times in more than 10 years, and went from being paid $8 an hour to $72,000 annually.
However, the article points out that workers are generally more likely to get significant raises when they move jobs rather than wait around for salary increases. Most employers give current employees moderate wage increases over time, somewhere in the ballpark of 3–5%, while people who move jobs usually see an 8–10% increase in salary.
I’ve seen this play out in my real life. At one of my last salaried jobs, at a company in San Francisco, I was told most employees received between a 2-3% wage bump when annual reviews rolled around—and that wasn’t even guaranteed. I was hired at $47,500 annually in 2015, and though I received a title change (I went from trainer to head trainer) during my tenure, it came with no corresponding salary increase. As my annual review time came around, I calculated that a 2% wage increase would have been less than $1,000 more a year.
More reporting from Forbes by Caroline Castrillon shows that people are less inclined to stay at jobs for long. “Over 22% of workers ages 20 and older spent a year or less at their jobs in 2022,” Castrillon writes. “That’s the highest percentage with a tenure that short since 2006, according to a study conducted by the Employee Benefit Research Institute.”
One of the reasons for this trend, as Castrillon notes, is inflation. Speaking of that former job of mine, I was hired by the company in 2015, and my annual review was in 2016. The inflation rate that year was 2.2%, so in practice, my “raise,” if I got one, would have been rendered null and void—I’d have had the same buying power as I did the year before.
And 2016 was a modest year, inflation-wise. It’s no secret that inflation has been a painful issue for workers and consumers globally. In the United States, inflation went up 6.6% in 2022, according to the Bureau of Labor Statistics, meaning that many people who received modest raises at work now receive less money, in real terms, than when they started their jobs.
It’s also worth acknowledging that raises have a much more significant impact on workers when their pay is lower. I can assume that many coffee shops have no formal measures to give employees raises, especially because hourly workers are often seen as temporary. Why then put in place any formal procedures to ensure people feel taken care of?
Obviously, this is a critical misstep, but employers have to be realistic: A jump from $12 to $13 an hour increases a worker’s take-home wages by 8.3%. People aren’t going to stick around just because you think loyalty—and to be clear, loyalty without reciprocity, if you aren't giving regular wage increases—matters.
A One-Way Street
Loyalty makes sense for employers. Hiring new people costs employers money, and employers should be incentivized to keep workers they like around for as long as possible. But I’ve yet to hear anyone argue for the importance of loyalty in a way that actually considers the needs of workers and isn’t punitive.
For example, I’ve heard arguments that loyal employees get better job recommendations down the road. Why in the world would you hold someone’s need to move on and make more money over their head? If your only argument for loyalty lies in your proximity to power (you, as the employer, wielding power over workers), then you have a serious problem and need to self-reflect.
I also found it to be an interesting double standard that executives aren’t very loyal. An article by Monika Hamori for the Harvard Business Review cited a report that “executives now stay with an organization for only 3.3 years, on average, before moving on. Outside job changes outnumber internal ones by about two to one.” This has been on my mind recently with all the changes in the top positions at Starbucks, including the arrival of the incoming CEO, Brian Niccol, who left his job at Chipotle to helm the coffee megabrand. CEOs and people making massive amounts of money seem immune from this criticism.
When I first wrote about loyalty in 2019, I noted that it was a tricky topic. We prize loyalty so highly, and consider it a sign of good character. We often demand it unequivocally, and don’t often consider the context or ramifications of loyalty for those who can’t afford to give it.
So maybe take a moment to reflect. If loyalty is truly important to you as an employer, it has to start with you. And if you’re just a regular person reading this who still feels sticky about loyalty, take a page from a report Waldman (the one with the HR friend, “Joy”) cites from Oliver Wyman: “If other generations viewed job-hopping as a stigma, Gen Z wears it like a badge of honor.”
Some employers offer 401(k) matches, but you should ask more questions about this: The terms may require you to work at the company for a set amount of time before you receive the match. In some cases, like a former company I worked for that claimed it offered both a 401(k) match and profit sharing, the deal isn’t so sweet. When I asked about profit sharing, my employer looked at me like I was out of my mind and said, “That’s what the 401(k) is for.” NO SIR THAT IS NOT THE SAME. You cannot name two benefits to lure employees in and then decide to lump them together!
tl;dr, get every condition of your employment in writing.
It seems to me like employees' "loyalty" is something that company should have to earn. Most food and beverage jobs are difficult, stressful and low paying. Who would be loyal to that without mitigating factors?
Our team is talking a lot about culture building in f+b so this really hit for us.