Over five years into the economic recovery, it appears that American workers are feeling more confident about leaving their positions to find new ones. Experts say it’s a sign of a more dynamic labor market.
According to the Labor Department, nearly 2.8 million Americans quit their jobs in September which is the most since April 2008, although still behind pre-recession highs. The monthly jobs report for November is due out tomorrow, so we’ll see how many jobs were added in the previous month and if the unemployment rate dropped for a reason other than workers leaving the job market.
Not surprisingly, younger workers are on the move most. According to Moody’s Analytics, the number of 16-to-24-year-olds leaving one job for another in Q3 was up 14 percent versus this time a year ago. The percent of older workers (ages 25 to 54) leaving their jobs increased 9.5 percent. Younger workers who don’t own property or have children have greater flexibility to be mobile – uprooting their lives and moving across country for better opportunities. We’ll see if this recovering job mobility has a trickle up effect on older workers.
While we don’t advocate quitting a job before having the next one in the bag, it can’t be denied that this mobility is good not just for finding new jobs, but for finding new positions at better wages. To incentivize talent from leaving or to attract skilled workers, employers need to offer higher salaries and perks – not just in Silicon Valley or the tech sector but across the board.
Quitters are growing in many types of businesses but most visibly in leisure and hospitality, which has added nearly 2 million jobs since early 2010. In health care, technology and engineering, skilled workers are in such high demand that many are staying in slots for just months before jumping to better-paying positions, says Paul D'Arcy, marketing chief for job site Indeed.com. And a truck driver shortage is sparking bidding wars for talent and high turnover at carriers.
The number of quitters like Kapur lagged a steady acceleration in job growth during most of the 5½-year-old recovery. An uncertain economy made Americans hesitant to leave stable positions to become new employees at other firms and thus more vulnerable to potential layoffs.
Employers are recruiting more aggressively, too, as falling unemployment shrinks the pool of jobless Americans sending out résumés. The pickup in quitters is becoming contagious: As workers see longtime colleagues depart, they're testing the waters themselves. Some of them also will leave, creating more openings to be filled.
This news is an encouraging sign. Note that higher minimum wages by presidential fiat or legislation is not driving growing wage increases, it’s market forces. According to payroll processor ADP, annual raises for private-sector workers who held the same job averaged 4.5% in the third quarter compared with 3.5% in the year-earlier period. Employers are entities that make rational decisions. If raises, training, educational benefits, or other perks will keep their best talent, then employers will offer them.
In addition, when workers loosen their fingers on the jobs they hunkered down with during the recession, they create opportunities for those who are unemployed to find positions. It’s a game of reverse musical chairs, where not only are the players moving from seat-to-seat, but new chairs get added and players who were out can jump back in.
Let’s hope for continuing recovery and also that policymakers don’t do anything silly to stymie this progress.