Americans are quitting their jobs at the fastest rate in the last 6 years, according to the latest JOLTS (Job Openings and Labor Turnover Survey) report released by BLS (Bureau of Labor Statistics). The news may send shivers down the spines of those who have been deeply affected by the recession, but this is good news. Now let’s put things in context for this announcement to actually make sense.
First, a look at the number. BLS says that about 2.8 million workers decided to quit their jobs in September, which is around 2 percent of the workforce. That’s 0.3 million more compared to the previous month. A similar rate has been recorded in April 2008, when the economic recession was barely a threat. The figure hit bottom in April 2009, when just 1.3 percent of the employees decided to try their luck somewhere else.
Secondly, hires rose in September to 5 million from 4.7 million in August. A similar figure was being recorded in December 2007, another good news. September ended with 4.7 million job openings.
Total separations in September reached 4.8 million, 0.3 million more than in August. The number includes the quitters, as well as those who were laid off or discharged.
The Midwest and Western regions seem to witness the highest turnover rate. According to JOLTS, the regions saw high rates of both separations and hires.
Analysts say that the quit rate is one of Federal Reserve Chair Janet Yellen’s favorite indicators, which turned the JOLTS report into one of the most highly expected publications by the market.
It has been a while since official reports were hinting at a recovery from the recession. But although the number of hires has steadily increased, the rate of quitting has been rather low. The main problem is that even when the number of jobs lost during the recession has been recovered, wages were far from reaching prerecession levels.
So, a higher rate of quitting could translate in higher confidence that a better wage may be just around the corner. Or that a better paying job has already been found. Either way, the figure is a definite indicator of healthy economic recovery. Low wages have been forcing the economy to underperform. If wage do indeed raise at higher rates than in the last couple of years, consumption rate will grow as well, putting the economy back on track.
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