Job quits level off despite falling unemployment
November 25, 2015 | USA Today
There isn't quite enough quit in Americans these days.
The number of workers switching jobs has leveled off this year after rising steadily since the labor market bottomed out in January 2010.
Their stagnating ranks concern some economists because a large number of "quits" reflects a dynamic economy in which workers feel confident enough to leave one job for another. Job switching also ensures that workers are in positions that fully utilize their skills, increasing productivity and economic growth.
About 2.7 million Americans quit jobs in September, the latest Labor Department data available. That's a solid total, but it has held steady for the past 13 months despite an unemployment rate that fell to 5.1% from 5.9% during that period. By contrast, from early 2010 to late 2014, the number of quits climbed from 1.7 million to 2.7 million after many workers had hunkered down and held on to positions during and after the Great Recession.
During a similar point in the last recovery in late 2005, with unemployment at about 5%, the number of monthly quitters hovered at 3 million.
"Employees do not seem confident enough in the labor market to quit jobs at nearly the rate they did during the last expansion," UBS economist Samuel Coffin says.
He attributes their caution to vestiges of the bruising downturn, particularly modest average wage growth of about 2% a year that likely isn't enough to entice many workers to take a risk. Labor market "slack" — such as part-time workers who prefer full-time jobs and are not counted in the unemployment rate — likely has held down raises by providing a shadow labor supply to employers, Coffin says.
That may be changing. Annual pay gains picked up to 2.5% in October, though it's not clear if that marks a blip or the start of a trend.
Another factor is that some Americans burned by the housing crash still owe more on their mortgages than their homes are worth, or are "under water," keeping them from selling and moving to another city for a better job, says Mark Zandi, chief economist ofMoody's Analytics. About 13% of homeowners are "under water," down from a peak of 29% after the real estate crash but still above a normal 5%, according to RealtyTrac.
Some of the flattening in quits may simply be due to the changing face of the U.S. workforce. Baby boomers nearing retirement now account for a larger share of all workers, and older employees are less likely to jump ship because they're in the right job or don't want to jeopardize benefits amassed over many years, Zandi says.
Yet staffing firms also cite the changing needs of both workers and employers in a maturing recovery. Companies are in search of workers who have more specialized skills, says Jeffrey Cohn, managing partner of executive search firm DHR international.
And instead of looking for stability or higher pay, as they did earlier in the upturn, many candidates are being more selective and seeking increased training and a promising career path, says executive Paul McDonald of staffing firm Robert Half.
Andy Garcia, 25, of Denver, who designs websites and smartphone apps, has switched jobs twice this year, spurred by a hot market in his field. Although each move brought lower pay, his current position offers more opportunity for promotion. "There seems to be quite a lot of demand for what I do," he says.