Despite Positive Job Growth In Recent Months, People Are Quitting Jobs At Record Rates

Often overlooked in favor of more eye-catching employment headlines such as unemployment rates and job creation numbers, job quitting rates are an indispensable part of understanding the overall economic recovery. Newly released national data from the U.S. Bureau of Labor Statistics (BLS) reveal the number of people quitting their jobs in November 2021 hit a record high of 4.5 million—far above any other level on record since data first started being recorded.[1] Since the summer of 2021, a collective 21.3 million individuals have quit their jobs across the nation.[2]

The “Great Resignation,” as economists and others are calling it, seems to be disproportionately impacting several key industries sensitive to the ongoing COVID-19 virus. As of the latest release, the following sectors lead the list in November job resignations at the national level:

1. Leisure and Hospitality (1,002,000);
2. Trade, Transportation, and Utilities (996,000);
3. Professional and Business Services (798,000); and
4. Education and Health Services (660,000);

Due to reporting schedules by the federal government, data on job quitting rates are typically lagged by two months in the U.S. As a result, we will not begin to see the effects of the Omicron variant on employment outcomes until February 2022.

Updated figures for Florida-specific job quit numbers will not come out until later this month, but based on the latest available report, some 260,000 Floridians left their jobs in October 2021, primarily in the Leisure and Hospitality, and Retail Trade sectors. This figure is down from the peak of 277,000 set in September 2021; however, it remains to be seen whether Florida will follow the national trend and post a new record for job quits as the Omicron variant unfolds.[3] Quit rates are having a discernible impact on job vacancies in Florida, with sectors like Education and Health Services; Leisure and Hospitality; and Trade, Transportation, and Utilities posting the highest number of current vacancies around the state.[4]

Why is rising job quitting rates a worrying sign for economic recovery? Certainly, in the past (especially pre-pandemic) job quit rates were often seen as a healthy sign of a growing economy, reflecting worker optimism to find better jobs. Although this may still be the case for some people, a majority of job quits are in primarily customer-facing industries (e.g., Accommodation and Food Services, Health Care, and Social Assistance) for reasons such as low pay, burnout, physical risk, little work-life balance, and overall economic uncertainty.[5]

If escalated job quit rates continue to rise, there are certain long-term implications that may not be easily quantified. As discussed in Florida TaxWatch’s 2022 Economic Preview – Settling Into the New Normal, resignation rates among mid-career employees between 30 to 45 years old are higher compared to younger employees (contrary to the belief that young workers are driving turnover).[6] Attrition of experienced employees may present added problems for productivity, knowledge sharing, mentorship, and other outcomes. Additionally, it is unclear how over time, differences in work values and preferences will spur disconnect between employees and employers.[7]

These developments are also exacerbating labor shortages witnessed across the country and creating a more competitive labor market that gives notable leverage to workers seeking higher wages. Based on wage data from the Federal Reserve Bank of Atlanta, year-over-year wage growth for job switchers was around 4.3 percent in November 2021 compared to 3.2 percent for workers who stayed at their current job.[8] In other words, job switchers are getting faster pay raises than those who stay in their current positions. The rise in wages will likely provide workers with more disposable income for consumer spending but may also disadvantage small businesses that may not be able to absorb higher labor costs compared to larger businesses. The effect of wage growth on inflation is another looming consideration that will be closely watched over the coming year.

Job quitting rates, like other macroeconomic indicators, is an imperfect science but still yield insights. Even with promising job growth figures, lowering unemployment, and gradually improving labor force participation in Florida and parts of the country, the “Great Resignation” is a nuanced reminder that the job market is still far from full strength. When the next round of data is released next month, we will be able to roughly quantify the damage inflicted by the Omicron variant. For the foreseeable future, understanding who is leaving their jobs, for what reasons, and where they are heading, will be difficult to fully know. Nonetheless, keeping an eye on the labor market recovery, and job quits more specifically, will be crucial for the longevity of the recovering economy.