Americans Are Quitting Their Jobs In Records Numbers, Highest Resignation Rate In Nine Years

More and more Americans are voluntarily quitting jobs, and the rate of resignations went up seven percent (3.1 million) in December, according to the Labor Department’s monthly Job Openings and Labor Turnover Survey (JOLTS) report.

It’s the highest rate since December 2006, a sign that workers are confident about their ability to find new jobs despite growing financial and market problems. JOLTS also revealed that hires rose to about 5.4 million workers.

The figures show a significant improvement for the U.S. workforce. Americans generally shift from one job to another if they think they can maximize their full potential in another company. The Labor Department employment situation report released last week showed the U.S. economy added 280,000 jobs in November, 262,000 new openings in December, and 151,000 in January. The unemployment rate reportedly reached an eight-year low, and wage growth went up last month.

JOLTS report also included job openings and pace of hiring. The recent report suggests that the labor market has improved and can be compared to prerecession levels.

According to economists, workers’ employment outlook will improve stronger wage gains, which is considered key to stronger economic growth.

Wells Fargo economists have shared their views on the increasing number of people quitting their jobs in a research note on Tuesday. “The pickup in quits reflects workers feeling additional job opportunities are more widely available.”

“Job switching is an important source of an individual’s wage growth. In addition to firms having to compete more heavily via wages as the labor market tightens, the bump in wages reflects the presumed productivity enhancements of better matching workers with available jobs,” the economists wrote.

Job openings climbed five percent (5.6 million) in December, the second highest level ever recorded, following the July 2015 record when it reached 5.7 million. Layoffs reportedly decreased to 1.6 million, the lowest level on record in more than a year.

The data also showed hires went up to 5.36 million from 5.25 million, which could be considered good news for both job seekers and employers. When openings are much higher than hires, it could mean workers do not meet the skills employers are seeking.

However, economists are uncertain if the numbers of people quitting jobs will level off in December or if it will continue to rise in 2016.

Despite the fact that many large companies are announcing layoffs and cutting corners, and despite the fact that job creations slowed down last month, the Labor Department is positive that the market is getting better.

“Despite the turmoil in financial markets and increasing talk of recession, the labor market continues to improve and is moving toward full employment,” said PNC Financial Services senior economist Gus Faucher. “Job openings and hiring are up, workers are leaving their jobs to find new ones, and layoffs are very low.”

The number of unemployed job seekers per open job reportedly dropped to 1.4 in December, the lowest level since March 2007. Economists expect that number will increase over time.

“Diminishing labor market slack has led to a modest increase in wage growth, evident across several measures of worker compensation,” Jesse Hurwitz, an economist at Barclays in New York stated. “We expect that wage growth will continue to move up gradually, helping core inflation return toward target once the headwinds from lower import prices subside.”

Daniel Silver, an economist at JPMorgan in New York also shared the same sentiment, saying “The combination of more job openings and more people quitting jobs could result in pay increases, and we have seen a few other signs that wages have increased as the labor market has tightened.”

[Image by Justin Sullivan, Getty Images]