There are few things quite as satisfying as quitting a bad job. And in 2019, U.S. workers quit theirs at the fastest rate on record.
Each month, the Bureau of Labor Statistics publishes figures on the number and percentage of workers who quit their jobs (often referred to as the “quits rate”) as a part of their Job Openings and Labor Turnover Survey (often abbreviated as JOLTS.)
The data goes back to December of 2000. In August of 2019, a record-breaking 4,478,000 workers quit their jobs. That amounts to roughly 3% of the total nonfarm U.S. workforce, and is the highest quits rate recorded by the BLS. When seasonally adjusted for annual labor patterns, that figure is closer to 2.4%, still tying for the highest rate on record.
For comparison, in August of 2009, the adjusted and non-adjusted quits rates were 1.4% and 1.7%, respectively. As the economy rebounded, so did the quits rate. In 2018, over 3.5 million Americans quit their jobs every month, and the quits rate peaked at 2.9%.
“The quits rate and the JOLTS report has been showing to us what we've been seeing with the worker, with the professional: they have confidence in the job market today,” Paul McDonald, senior executive director at Robert Half, a global human resource consulting firm, tells CNBC Make It. “There's a tremendous amount of opportunity for individuals out there.”
Indeed, the United States is experiencing a tight labor market. Most recent figures from the Bureau of Labor Statistics indicate that there are roughly 7.3 million job openings in the United States and that the unemployment rate is just 3.5%.
“There's more open, unfilled jobs than there are unemployed people,” Greg McBride, chief financial analyst at Bankrate, tells CNBC Make It.
New jobs A major reason employees quit: their pay
But behind the hot job market lies an unfortunate truth: often, the only real way workers can significantly increase their earnings in the current labor market is to quit their jobs and take new ones.
“There's a number of factors that are leading individuals to go and seek new employment, which is showing in the quits rate,” says McDonald. “Number one is compensation.”
“Companies are willing to pay about 15% more for new employees, but they're only willing to give their current employees about a 2% or 3% annual raise,” he explains, citing Gartner's research. “So to get ahead financially, what a lot of employees have realized is that in today's tight labor market, the best thing to do is to go to another company to get more money rather than trying to get more money by staying at your current company.”
The practice of paying more for new employees rather than giving raises to existing employees is likely costing employers, says Kropp, but can be explained by a human flaw in how organizations hire and manage employees.
“There's a perception that the grass is always greener, if you will, when you bring in a new person, so you're willing to overpay them for all the stuff that they've done,” he says. “But when it comes to your current employees, as a manager, what you tend to look at is all of the things where they drop the ball or things they haven't done well or the mistakes that they've made.”