More Americans are quitting their jobs, which could mean larger paychecks are on the way



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In this Jan. 29, 2015 file photo, Tyler Kelly, 19, left, fills out applications for parking enforcement and environmental compliance jobs during a public safety job fair at City Hall in Saginaw, Mich. The Labor Department releases job openings and labor turnover survey for January on Tuesday, March 10, 2015. (AP Photo/The Saginaw News, David C. Bristow)


WASHINGTON — Quitting your job — all but unheard of during and after the Great Recession — is becoming more common again. That could mean pay raises are coming for more Americans.

The trend has already emerged in the restaurant and retail industries, where quits and pay are rising faster than in the overall economy. Workers in those industries appear to be taking advantage of rising consumer demand to seek better pay elsewhere.

Workers who quit typically do so to take higher-paying jobs. That's why rising numbers of quits typically signal confidence in the economy and the job market. As the trend takes hold, employers are often forced to offer higher pay to hold on to their staffers or attract new ones.

The Labor Department said Tuesday that the number of people who quit jobs rose 3 percent from December to January to 2.8 million — the most in more than six years. Quits have jumped 17 percent over the past 12 months.

Since the Great Recession ended, the figure has soared. Just 1.6 million people quit their jobs in August 2009, two months after the recession officially ended. That was the fewest for any month in the 14 years that the figures have been tracked.

Quits tend to open up more jobs for the unemployed. One barrier for the jobless in a weak economy is that few workers risk quitting their jobs to take a different one, in part because new hires are often most likely to be laid off.

So most workers stay put, leaving fewer options for college graduates, people recently laid off and others seeking work.

The rising number of quits has begun to affect many larger corporations. Frank Friedman, interim CEO at the consulting and auditing firm Deloitte, says his firm's clients, which include about 80 percent of the Fortune 500, are increasingly struggling to retain employees.

"The biggest problem for many businesses is talent retention," Friedman said. "Wages are a critical component of it. The balance of power has changed in favor of the employee."

Deloitte itself faces the same challenges. It's stepping up its hiring, in part because more of its employees have left for other jobs.

The firm plans to add 24,000 people this year, including paid internships, to its staff of 72,000. That's up from the past several years, when Deloitte typically hired 19,000 to 21,000 people, and the increase is largely to make up for more quits.

The same trend is squeezing the restaurant and hotel industries. Nearly half their workers quit last year, up from about one-third in 2010. And average hourly earnings for restaurant employees rose 3.4 percent in January compared with 12 months earlier, before adjusting for inflation. That's much better than the national average of 2.2 percent, which was barely above inflation.

About one-third of U.S. retail workers quit last year, up from one-quarter in 2010. And pay rose 3.2 percent in January from the previous year.

Individual retailers, including Wal-Mart, the Gap, and TJX Cos., which owns T.J. Maxx and Marshalls, have announced pay raises in recent weeks

Not surprisingly, quit rates are much lower in higher-paying industries. Just 12 percent of manufacturing workers and 14.8 percent of financial services employees left work last year. The quit rate in government was just 7.7 percent.

Mark Zandi, chief economist at Moody's Analytics, said that data from payroll processor ADP showed that workers who switched jobs in the final three months of 2014 received average pay increases of nearly 14 percent compared with their previous jobs. For those who remained in the same job for a year, pay rose an average 3.2 percent, before adjusting for inflation.

(Moody's and ADP work together to compile measures of hiring and wages.)

For the economy as a whole, significant pay gains remain rare. Average hourly earnings rose just 2 percent in February from 12 months earlier, about the same weak pace of the past five years. Many economists expect those gains to pick up by year's end as the U.S. unemployment rate, now 5.5 percent, falls further.

Some other data in the Labor Department's release Tuesday:

— The number of open jobs rose 2.5 percent in January to nearly 5 million, the most in 14 years. That's a sign that the robust hiring of the past 12 months should continue. Openings are typically followed by job gains, though many employers have been slow to fill their available jobs.

— Total hiring actually slowed in January, to fewer than 5 million, after reaching 5.2 million, a seven-year high, in December. Those figures reflect everyone hired in that month. By contrast, the job gains in the government's monthly employment reports are a net figure: Jobs gained minus jobs lost.

— There were, on average, just 1.8 unemployed people for every open job in January. That ratio is typical of a healthy economy and down from a record high of nearly 7 to 1 in July 2009. The drop in competition for each job could nudge employers to raise pay.

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