In a robust labor market, more people say ‘I Quit.’
Update: The JOLTS numbers are in. According to the Bureau of Labor Statistics:
“There were 4.8 million job openings on the last business day of August, up from 4.6 million in July… The hires rate (3.3 percent) was down and the separations rate (3.2 percent) was essentially unchanged in August. Within separations, the quits rate (1.8 percent) was unchanged and the layoffs and discharges rate (1.1 percent) was little changed.
See you again next month, quits rate.
The Bureau of Labor Statistics issues its Job Openings and Labor Turnover Survey—also known as JOLTS—for August on Tuesday. Back in July, the report showed 4.67 million job openings, and economists expect a healthy increase to 4.71 million job openings in August. That would be consistent with labor-market improvements reported in September’s employment report, with 248,000 jobs added to the economy, and the unemployment rate falling to 5.9 percent.
However, one data point in the JOLTS report has been consistently underperforming the rest of the labor market: the quits rate. This indicates how many people are leaving their jobs voluntarily—because they got a better offer, or think they can look around for a while without becoming long-term unemployed (People can also be classified as ‘voluntary quits’ if they leave a job to go back to school, to care for a family member, or to leave the workforce; retirement and disability are not counted as ‘voluntary quits’). A higher quits rate is seen as a sign of job-market churn and flexibility for both employers and employees.
Since the recession, the quits rate has remained stubbornly low. In July, there were 2.5 million quits; the level of quits consistently topped 3 million in the years before the recession.
The quits and layoffs and discharges numbers starting from January, 2004.
John Challenger, at outplacement firm Challenger Gray & Christmas, thinks the quits rate will eventually catch up to other improvements in the labor market. But right now, he thinks many workers are still recession-scarred. “Even if I might get paid more money,” he said, characterizing the mindset of a typical worker, “safety is still of high value. Better to hold onto the job I have than to take something new.”
Elise Gould, a labor economist at the Economic Policy Institute, said workers don’t think they have much bargaining power with employers. So many are reluctant to risk quitting and looking for a new job. “The fact that we’ve seen sluggish wage growth, workers see that,” she said. “They know they can’t bid up their wages because there are so many people waiting on line—on the unemployment rolls or out of the labor force.”
Gould said even as jobs become slowly more plentiful, workers fear that they’ll face stiff competition if they jump ship and go job-hunting right now.
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