Financial Consequences of Quitting

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Mark this in the category of things you don’t expect: In February, more employees quit their jobs than were laid off. It’s the first time that has happened since October 2008, according to the Bureau of Labor Statistics.

Part of the reason, of course, is that layoffs are declining as the economy struggles back from the recession, and many workers may be finding more job prospects. Presumably, some would have quit earlier if they could, so some pent up wanderlust is being released as the job market loosens up.

Finally, many people who kept their jobs through the recession may be pretty unhappy about the belt-tightening their employers put them through. Loyalty may be one of the casualties of the financial crisis.

So, let’s say you’re among the disgusted, the disappointed, the restless and the ambitious, and you’d like to quit. There are a few things to keep in mind.

Quitting without having a new job lined up is hazardous in the best of times, but it can be career suicide in times like these. Prospective employers may wonder what kind of fool voluntarily opts for unemployment, especially as there’s no unemployment compensation for those who leave jobs voluntarily.

Of course, jobs are still scarce and there’s an overabundance of candidates competing against you. Even if you do find a new job, it’s tougher to negotiate good salary and benefits from a position of weakness. The prospective employer may well assume you’re desperate for a job, and in a few months you might be.

If you take the prudent path and line up a new job before you resign, be certain the new job really resolves the problems of the old one. You may have had a lousy boss and like the new one, but how long will you have the new one? Are you certain you won’t end up with another tyrant, or that the old one would not have moved on, anyway, making the move unnecessary?

A move makes sense for a substantial pay hike, a promotion, better opportunity down the road or a significantly friendlier workplace. But how much of the problem with the old job is really specific to the job and not just part of working life, like having people tell you what to do?

Before changing jobs, make sure the new salary is really good enough to offset the expenses of moving. If you’ll have to relocate, for instance, will you have to sell your home at a loss? Would it make sense to postpone a move a couple of years in hopes your home will fetch more? Does housing cost more in the new location, or less? What about state and property taxes?

In moving to a new job, you may be giving up some unquantifiable benefits built up in the years you had the old one. Are long-time friends and political allies poised to move into powerful positions? Do you have job security through a union seniority system? Will you give up pension benefits or stock options?

Finally, have you exhausted all opportunities to make your current job better? If you can’t get a raise, could you get a transfer, admission to a training program, better hours or a more desirable office — anything that would make the place tolerable until conditions get better? If you know there are other unhappy employees, is there any chance their departures will create opportunities for you?

Changing jobs is now a standard feature of working life, as the lifetime job is more and more a thing of the past. Work life has to managed as carefully as an investment portfolio.

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