In a sharp reversal from the previous 15 months, more people quit their jobs in the past three months than were laid off. And that’s a good sign, economists say.
“In general, that’s a sign of better economic times,” says Donald Siegel, dean of the school of business at the University at Albany, part of the State University of New York. “I interpret it as a sign of an improving job market … when people feel confident enough to quit their jobs.”
The Bureau of Labor Statistics (BLS) data shows more people quit their jobs in February, March, and April than were laid off during those three months. In April, nearly 2 million people quit their jobs, the largest number of resignations in more than a year. By contrast, 1.75 million people were laid off in April, the fewest since January 2007.
“Resignations generally outnumber layoffs in a healthy economy. During recessions, people are hesitant to quit because jobs are scarce”, says John Wohlford, an economist with the BLS.
“One reason is that there’s a backlog of quits”, Siegel says. “People wanted to quit in 2008, during the height of the recession, but didn’t because they were worried they wouldn’t get another job. They waited until the optimal time to quit – when the job market improves.”
Many of those workers have also been subject to employers’ belt-tightening measures: wage freezes, furloughs, and pay cuts. Those workers may start to quit because they’re dissatisfied with the compensation at their current jobs, Siegel adds.
Low morale may also be triggering people to quit. During the recession, companies squeezed more out of their employees as layoffs forced fewer workers to do more work. Those who survived layoffs are often overworked and may be among the first to quit as the job market shows improvement.
But are there enough jobs to accommodate the millions now voluntarily leaving their jobs? Not yet, figures suggest. Although job openings are up, hiring has remained flat at about 3.3 percent since the recession began.
“One thing we do know from over a century’s worth of evidence is that quits rise and layoffs fall as job market improves,” says Siegel. “So absolutely, this is a good sign.”
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