Quitters Point to a Strengthening Labor Market
New data on hiring, firing, and labor turnover from the Job Openings and Labor Turnover Survey (JOLTS) show signs of an exciting trend for the US labor market: a pick up in the share of workers quitting their jobs. Workers usually only quit their jobs if they have a new job lined up or if they believe they can get a new job quickly. So an increase in the share of workers quitting is a good indication that job opportunities are plentiful and that workers think they can get hired.
During the current economic expansion, the quits rate had been slowly increasing but seemed stuck in the 2.2% range since the middle of 2017. However, the data in March and April of this year suggested growth (both months were at 2.3%) and the new data for May continue this trend with the rate increasing to 2.4%. The increase in May was even stronger for the private sector as it jumped to 2.7% from 2.5% in April. The quits rate for the private sector is in fact the highest that statistic has been since March of 2001.
The increase in the quits rate is an encouraging sign for the labor market, especially in light of other trends in JOLTS data. The number of job openings slightly declined in May to 6.6 million, but the figure for April was revised up to 6.8 million openings. The decline in the unemployment level was larger, however, resulting in a new all-time low ratio of unemployed workers to job openings of 0.91.
With job openings outnumbering unemployed workers and workings more likely to leave their current jobs, competition for workers continues to intensify. Hopefully this increased competition will help boost workers’ wages and push up the tepid wage growth seen so far in this economic expansion.