Quitting Our Way to a Stronger Economy

Americans are quitting their jobs at a gradually quickening pace, which is a reassuring sign that the labor market continues to improve.

This morning, we learned from the Bureau of Labor Statistics that about 2.8 million people chose to leave their jobs in January, up from roughly 2.72 million in December, and 2.66 million in November. It’s the highest this rate has been since April of 2008, four months into the Great Recession. It’s a sign that people can either find a new job, or feel confident enough that they can do so if they leave their current one, said Bob Hughes, senior research fellow at the American Institute for Economic Research.

We learned last week that the economy continues to add jobs at a healthy pace, although wage growth was still sluggish.  Stronger wages is usually one of the last things one sees in an economic expansion, Hughes said. First, companies typically stop laying people off, and then they expand through business investment. Eventually they start to add workers, and once competition for workers heats up, that’s when you start to see real wage growth, he said. “We’re still waiting for that,” he said.

But amid some signs of softness, such as industrial production, retail sales and housing numbers, these positive labor indicators, including the lower unemployment rate released last week, are a reassuring sign, Hughes said.

“The labor indicators would suggest the weakness in some other data is temporary and that economy’s doing just fine,” Hughes said.