As the Economy Grows, More Americans are Quitting Their Jobs
With the U.S. economy steadily adding jobs and some employers even struggling to attract skilled workers to fill positions, a related phenomenon is on the rise: people are quitting their jobs. In fact, as The Wall Street Journal reports, voluntary terminations are nearing their highest point since 2001. Moreover, in many cases, those resigning employees are finding higher paying jobs.
According to Labor Department data, 3.4 million U.S. workers chose to quit their jobs in April (another 1.7 million were laid off during the month). Amounting to 2.27% of total employment, that figure is the highest since July of 2001. Additionally those who were voluntarily unemployed accounted for more than 13% of jobless Americans in May — another 17-year high.
Not only does this trend underscore the confidence workers have in the economy but could also serve to spur wage growth. That’s because, according to data from the Federal Reserve Bank of Atlanta, those who switched jobs were found to make 30% more than those who remained in their positions for the past 12 months.
As mentioned, the job-hopping trend is emerging at a time when a reported 90% of businesses are hiring. This is also driving wage growth as business owners are increasing salaries in order to attract top talent. For example Dave Pavelka of Denver-based Kenny Electric told WSJ he’s been luring inexperienced workers to fill necessary positions by offering strong starting salaries and opportunity for advancement. He said, “I think the number-one driving force is the compensation part of it. Not just the entry level, but the potential for expansion, to grow.” Similarly Derek Volk of Volk Packaging Corp. told the Journal that, in addition to raising wages by 5%, the worker shortage has led him to be more open to special requests, such as an employee that asked for a later shift start. Volk explained to the publication, “A few years ago, that would have been a ridiculous ask, but now you have to be flexible.”
Just as we’ve seen the growing economy lead to an increase in consumer confidence, we’re now witnessing workers gaining the confidence to leave their current positions in search of better pay, more flexibility, and new challenges. As a result, the wage increase that’s already begun due to work shortages seems poised to rise in the coming months and perhaps beyond. Overall that’s great news for American consumers and the economy at large but a potential challenge that several business owners will surely be facing head-on.