The age-old adage that quitters never win holds true in most aspects of life, yet as an indicator of economic health, the more job quitters there are, the better. The health of the labor force has come under scrutiny in recent years, especially since critics have charged that the driving force between the gradually falling unemployment rate is job seekers, especially the long-term unemployed, leaving the work force altogether.
In tough economic times, workers hold onto their jobs for dear life, considering their chances of finding better jobs and higher wages a pipe dream. Recent statistics, indicating that almost 3 million American workers voluntarily quit their jobs in September, represent the largest volume of job quitters since the height of the financial crisis and suggest that a growing number of workers are bullish enough on the state of the job market to leave their current jobs in search of greener pastures.
The heightened number of job quitters coincided with 5 million persons being hired in September, across all sectors, suggesting that job-quitters may have done so at an advantageous time, where hiring has climbed back to pre-recession numbers. To put things in context, being that most job-quitters have another job lined up; the switch represents a two-for-one deal, as a second individual is usually needed to assume the vacated responsibilities of the quitter-netting the economy a total of two hirees.
2% of the Entire Labor Force Left Jobs in September
Janet Yellen, the Chairwoman of the Federal Reserve, has been waiting to see improved numbers in the quits rate, to suggest that the economy, under her stewardship, is heading in the right direction. Confidence in the labor force is obviously positive thing for the U.S. economy, but the most important takeaway of the rising “quit rate” may be the potential for the trend to break the crippling stagnation of wages that has stood at an impasse since the financial crisis. Since workers refused to leave the safety of their current jobs during the crisis, wages stagnated as firms were not forced to bid against one another, to retain top talent. Some believe that wage growth will ultimately spur inflation, which will in turn, lead the Federal Reserve to achieve its long-planned move of hiking interest rates in 2015.
Job-Quitting and Higher Productivity?
“Millennials,” loosely defined as the segment of the population born between 1980 and 2000, will likely find themselves at the heart of a rising quit rate, if the trend is to continue. Be it a product of upbringing, or the fact that millennials often have less restrictive forces, such as a family of their own to consider when job hunting, younger workers are much more likely to uproot from their jobs within a year of their hiring. Economists believe that those who switch jobs routinely in their 20’s see wage growth in their 30’s and 40’s and that job-hopping is the best way for a young individual to find a career that best utilizes their skill set in the long-term. One of the biggest concerns during the recession and the years that followed was that the labor-force was teaming with workers that were “overqualified” for their positions, such as college graduates holding retail jobs, or working in restaurants. The higher rate of workers quitting, bullish on their job prospects, may go a long way towards rectifying that trend and resulting in a more efficient workforce.