People are voluntarily quitting their jobs at the highest rate since the pre-recession era, according to the Job Openings and Labor Turnover Survey — known as JOLTS — published by The Bureau of Labor Statistics.
The report says that 2.16 million people quit their jobs in the latest data, which represents 53 percent of all job separations — this includes quits, layoffs and discharges — when accounting for retirees.
The graph below, published by Gluskin Sheff Research, illustrates the trend in the quitting rate and the number of people who have quit as a percentage compared to the total number of people employed in the past decade:
Gluskin Sheff Research
So what does this mean about our labor market? In short, it's an indication that people are confident that they can find other opportunities elsewhere and is "a sign of any sustained improvement in the labor markets," Fed vice chair Janet Yellen said in a speech last month.
Peter Cappelli, a management professor at the University of Pennsylvania's Wharton School of Business, tells Christopher Rugaber at The Associated Press that this confidence happens when "the economy grows fast enough." Ultimately, people have faith in their own skills to make a living some other way rather than stay in a job they're not satisfied with.
So who are these workers? T here's a good possibility that people are leaving their jobs to pursue freelancing, consulting or the entrepreneur route. This need to work for yourself is predicted to reach 40 percent of the American workforce by 2020, and is most common in sectors of the economy that are growing.
Economist Robert Reich tells us that "at least [for] now, a few employees feel t hey can do better as consultants or freelancers," because " they've been required to take on so much extra work they need more control over their time. Although the labor participation rate is extremely low — the lowest it's been since 1979 — employers are demanding longer work hours from those who are employed.
"This has put a particularly heavy burden on working mothers and others who have primary responsibility for child care or elder care."
Aside from those with an entrepreneurial mindset, another group of people who are quitting tend to be " young, black, Hispanic, female [and] working class," says Pat Buchanan at Free Republic. In this group, workers may be leaving to go back to school for a chance of finding better jobs.
Although the demand for labor is on the rise, there has been a mismatch in the skills employers need and what's currently available. According to the BLS, job openings have risen by 11.3 percent in the past year, yet hiring has declined by 1.6 percent, meaning that jobs are available but there aren't enough people with the needed skills to fill them.
Although workers quitting may be tiresome for companies and HR, the bigger picture indicates that those in the workforce are confident about what's ahead for the labor market.
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