Jobs report pt.3 - a JOLT of quitting

On the heels of the "disappointing" jobs report from Friday, we got a big indication why we haven't been recovering as much. Because a record number of Americans are quitting jobs.

According to data released by the U.S. Bureau of Labor Statistics on Tuesday, 4.3 million Americans quit their jobs in August. The nationwide quit rate increased to 2.9% of the workforce. That's the highest percentage ever reported by the BLS Job Openings and Labor Turnover Survey series.

To put August's numbers in perspective, the number of workers who quit their jobs rose by 242,000 from July — and by around 1.3 million since August 2020, which recorded a total of almost 3 million quits.

Experts stress that people are leaving their jobs as workers across the country are demanding higher pay, better employment conditions and critical support in their daily lives.

"There is no 'labor shortage.' There's a child care shortage, a living-wage shortage, a hazard pay shortage, a paid sick leave shortage, and a healthcare shortage," Robert Reich, UC Berkeley professor of public policy and former U.S. Secretary of Labor, wrote on Twitter Tuesday. "Until these shortages are remedied, Americans won't return to work anytime soon."

Nearly 3% of U.S. workers quit their jobs in August.

“To be working as much as humanly possible for all of 2020 and then get told we don't matter? It felt like crap,” said Jennifer Booth, 48, who quit an IT job in retail to work for an insurance company. https://t.co/HiFTKhJmis

— Abha Bhattarai (@abhabhattarai) October 12, 2021

Huh, seems like we could pass some bills that have those sort of supports put in them, in order to stabilize the workforce, eh?

The numbers come from the latest Job Openings and Labor Turnover Survey (JOLTS), which measures things from the end of August. While more hiring is happening compared to where we were in the pre-vaxxed times of March, you can see that the pace has dropped off in recent months, and the level of quits continues to rise.

The big increase in quits helped keep the number of openings near the record that was set in July. And in particular, food services and accomodations had a whole lot of people walk away from their jobs in August.

You can see why that sector has had basically no net job growth over the last 2 months. Retail trade also tailed off in the August jobs report, as the growth in quits has continued to outpace the increase in hiring, so the amount of job openings can't be assuaged.

So with job openings staying high and employees walking away, employers have had to shell out more to fill these positions as well as keep people at their current jobs. And that helps explain why wage growth has been so strong in recent months, including September.

Average hourly earnings for all employees on private nonfarm payrolls rose by 19 cents to $30.85 in September, following large increases in the prior 5 months. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $26.15. The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages.

The increase has been especially noticeable on the bottom end of the wage scale, where the most quits are happening. The leisure/hospitality sectors have had average hourly wages rise by a total of 2.0% in the last 2 months, and retail trade jobs have had their wages go up by 1.3% since July.

This also helps explain the multi-year highs in inflation that we are seeing these days, but with wages keeping up, this isn't as bad as the scary headlines may seem. But is that a continual upward spiral of shortages, or does something happen that starts to have this disrupted job market level out?

There is no question that American workers are not accepting what they settled before COVID-19 was a thing. It's a nice change from seeing big business and other employers have control over so many others, but things are likely to be weird in the job market and the overall economy for the near future as a result.

I don’t know what will ultimately happen but this pandemic has shown a lot of workers in this country that they were being taken to the cleaners and they don’t have to lie down and take it anymore.

— Oliver Willis (@owillis) October 13, 2021