Janet Yellen the Federal Reserve Chairwoman, suggested that the quit rate which is the proportion of workers who quit their jobs in a given month are worth focusing on. This is because the willingness of workers to quit their jobs is only when they are confident that they are likely to be rehired.
The Fed sees this as very important as a higher quit rate suggests that the labor market is recovering. Even though it needs to be monitored because confidence workers are more likely to push for higher wages which might turn into inflation.
On 12th November 2014, the Bureau of Labor Statistics reported that the quit rate peaked in September to 2%, which is was the level at the onset of the recession. The quit rate was at 1.8% over the past seven months even though business were hiring and the unemployment rate was falling sharply. This report suggests that the quit rate is now where you might expect it to be, given the unemployment rate. Both the quit rate and unemployment remain at levels that suggests that labor market recovery is unfinished work.
The rising quit rate definitely suggests improvement. During the worst times of the last recession, very few people who had jobs were able or bold enough to quit them. I do not think, however, that the increase in the quit rate implies that the job market is as healthy as it should be. It is important to recognize that the quit rate is one of many indicators that point to recovery.
ReplyDeleteIt is good to see that the quit rate has improved since the recession. It is true that workers are more likely to quit if they know they be hired in a short amount of time. Since unemployment is declining, the quit rate should rise slightly because firms have been able to hire more workers. This gives many workers the flexibility to move between jobs without being fired. Overall, these signs show that the economy is performing much better than several years ago.
ReplyDeleteThis is an interesting way to measure improvement in the economy. It does make sense that a higher quit rate would indicate recovery in the labor market. I wonder how accurate this measure is in comparison with the unemployment rate, as the precision of the unemployment rate has been questioned recently.
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