Pace of Quitting Rises to Highest Since February
DataTrek’s ‘Take This Job and Shove It’ Indicator Improves
The U.S. economy has yet to recover more than half of its pandemic-related job losses, but new data out Wednesday shows quitting is becoming more and more common—a trend that typically illustrates increased confidence among workers, but in this case, may have more to do with health and childcare concerns.
The so-called quit rate—the number of people who quit their jobs as a percentage of total employment—rose to 2.1% in July, the highest it’s been since the COVID-19 outbreak shocked the economy in March, according to the latest figures from the U.S. Bureau of Labor Statistics’ monthly Job Openings and Labor Turnover Survey (JOLTS). In February, before the pandemic, it was 2.3%.
- Quitting a job is becoming more and more common, with the so-called quit rate rising in July to the highest level since February, before the pandemic
- The ratio of quits to total job separations (including layoffs and discharges) climbed to 58.9%, also the highest since February
- The rebound in quitting would typically signal increased confidence among workers, but this time around it may have more to do with health concerns and lack of childcare
In fact, the ratio of quits to total job separations (which also include layoffs and discharges) rose to 58.9%, the highest since February, according to DataTrek Research, which calls the metric its “take this job and shove it” indicator. In April, it hit a record low of 18.8%, according to DataTrek.
“Our ‘take this job and shove it’ indicator is improving much quicker than it did during the last two economic cycles,” Jessica Rabe, co-founder of DataTrek, wrote in an email. “Typically, a rise in the number of people voluntarily leaving their jobs reflects improving economic confidence, however the unusually sharp and quick rebound may also be due to workers’ concerns about contracting the virus or concerns about childcare commitments right now.”
The JOLTS data, despite being older than the data in the widely followed Employment Situation report, provides a layer of insight not found in the latter report, according to Nick Bunker, economic research director for North America at the job site Indeed. Understanding why people leave their jobs helps assess consumer confidence, and the hiring intentions of companies are a leading indicator of the employment picture, he said.
The latest Employment Situation report, released by the BLS Friday, showed the unemployment rate fell from 10.2% in July to 8.4% in August. While this rate was down from as high as 14.7% in April, the pace of job growth has been slowing. The economy added 1.37 million jobs in August, less than the 1.73 million added in July, and far fewer than the 4.78 million added in June. The country has yet to recover 11.5 million of the 22.2 million jobs lost during the pandemic.
Health concerns may be a driving factor for the recent uptick in quits, Rabe and Bunker said, dampening what would otherwise be a promising trend. That said, some sectors that pose a lower risk of contracting COVID-19 (like real estate, construction, and professional and business services) also saw an increase in people quitting.
Indicator of Future Hiring
Other JOLTS data is particularly useful as a leading indicator of future hiring activity, Rabe said. Companies signaled more confidence with higher numbers of job openings in July, though actual hires declined to “normal levels” similar to before the pandemic, she said. Job openings—reflecting demand for new workers rather than furloughed workers—rose to 6.62 million from 6.0 million in June. Hires fell to 5.79 million from 6.97 million in June.
“Another increase in job openings is a heartening sign for workers who have permanently lost their jobs,” Bunker said in an email.
While the JOLTS report cites job openings, quits, and hiring rates as a percent of total employment, DataTrek analyzes these figures as a percent of the total workforce (a larger number) to make better historical comparisons, Rabe said.
By this measure, the quit rate showed a similar uptick, rising to 1.84% in July, from 1.63% in June. Another good sign? This ratio never fell to as low as it was in 2009 because of the Great Recession, Rabe said.
What’s more, job openings as a percentage of the total labor force—at 4.14%, up from 3.75% in June—have already returned to higher levels than during past periods of economic expansion prior to 2018, according to DataTrek.
“This pent-up demand for labor should prove positive for overall employment over the balance of the year,” Rabe said in an email. “We’ve seen this elevated level of hiring interest convert into near-term employment already.”
Specifically, prior JOLTS reports showed an uptick in job openings in service industries like accommodation and food services, and these industries proved to be among the biggest sources of job gains in the August Employment Situation report, Rabe said.
Indeed Job Postings
Meanwhile, another metric is pointing to a subdued recovery in the labor market: Employer job postings on Indeed.
At the beginning of May, the number of job postings on the site was 39% below the same date in 2019 (using a seven-day moving average) and that year-over-year comparison showed gradual improvement in May, June, and July. But since then, the deficit has stayed at roughly 19%, even through early September, according to Indeed. That shows “employer demand is not rip-roaring back” quite yet, Bunker said.
What’s more, prior to the pandemic there were more job openings than unemployed workers, and now there are about 2.5 unemployed people for every available job opening, Bunker’s calculations of the latest JOLTS figures show.
“The labor market took a historic shock from the pandemic and it’s slowly making some progress back, but it’s not clear we’re going to have the type of labor market we had earlier this year anytime soon,” he said.