The 1977 country song “Take This Job and Shove It” was a #1 hit. It’s interesting that a song about walking away from a job was such a hit when the unemployment rate was 6.8%. Maybe people were emboldened after seeing the unemployment rate drop from 9% in 1975. Or maybe people were dreaming of a day when they would be so confident that they could find a new job that they could just walk out the door.
Economists often look to the quits rate (the percentage of workers who voluntarily leave their jobs) as a measure of workers’ perceptions of the strength of the labor market. This is published in the Job Openings and Labor Turnover Survey. As of May, the quits rate was 1.8%, basically unchanged from a year ago. This is significantly lower than the 2006 average of 2.2%. It is a lot better than the 1.4% rate in 2009 and 2010.
The quits rate has increased most dramatically in the retail trade industry, going from 2.1% in May 2013 to 3.0% in May 2014. The quits rate has also increased noticeably in the construction and leisure and hospitality industries. From a regional perspective, the biggest increase over the last year has been in the Midwest, where the quits rate went from 1.6% to 1.9%.
A higher quits rate is a positive sign about workers’ perceptions of labor market conditions. However, the job situation is not uniformly better, nor is it back to normal. Looking at jobs gains and losses as a measure of business dynamism (high gains and losses are a measure of churn, a healthy sign of activity), firms with one to four employees appear to be suffering the most, with a gains rate of 15.5% and a loss rate of 14.7%. By comparison, firms with 1,000 employees or more have a gains rate of 2.5% and a loss rate of 2.2%. Small firms typically have significantly higher gains and loss rates than larger employers, so that’s not unusual. What is unusual is how persistently low the gains and loss rates have been for small employers. They aren’t adding and losing employees as quickly as they used to, indicating a type of stasis that isn’t entirely healthy.
This is why, even though we’ve seen five good months of payrolls expansion and a decent decline in the unemployment rate, it’s still a long road to normal.