Many of our colleagues are citing the statistic that a record 4.3 million Americas quit their jobs in October. The “quit rate” is historically very high now and that has been interpreted as a sign of economic malaise. Actually, no. A high rate of people leaving their job in most circumstances is a sign of dynamism and upward mobility for workers.
The quit rate is positively correlated with the strength of the economy and job market. The quit rate, for example, was its lowest ever during the Great Depression when the unemployment rate hit 25% – because it was too dangerous to leave a job and find a new one.
The Wall Street Journal reported last week that pay raises for workers who quit their job in the past year and moved into a new position were higher than pay raises for workers who stayed in their current job.
| On the other hand, the current quit rate is a little economically ambiguous because high quits have also corresponded with a big and troublesome decline in labor force participation under Biden. Thanks to higher welfare benefits, a lot of Americans who quit simply dropped out of the workforce. |