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During the past year, the rate at which Americans quit their jobs has steadily declined from a record high back to pre-pandemic levels — seeming to spell the end of the labor market trend that came to be known as the “great resignation,” labor economists said.
The “quits rate” fell to 2.4% in April, down from 2.5% the month prior and from a 3% peak in April 2022, the U.S. Bureau of Labor Statistics reported Wednesday in the Job Openings and Labor Turnover Survey.
This rate is the share of monthly quits (i.e., voluntary departures by workers) relative to total employment. It’s now roughly on par with the monthly pre-pandemic average between 2.3% and 2.4% in 2019.
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“I think the great resignation as we know it is over,” said Daniel Zhao, lead economist at career site Glassdoor.
“We are much closer to the labor market we had in 2019, which was hot but not overheating,” he added.
Workers enjoyed historic leverage amid Covid
Most workers who quit their jobs do so for new employment elsewhere. Quits, therefore, serve as a proxy for workers’ willingness or confidence in their ability to leave a job.
Quits started to surge in early 2021 as Covid-19 vaccines rolled out to the masses and the U.S. economy started to reopen.
Business’ demand for workers outstripped the supply of people looking for a job, giving workers an unprecedented amount of power in the labor market. Employers raised wages at the fastest pace in decades to compete for scarce talent.
Higher pay and ample employment opportunities drove Americans to leave their jobs in record numbers. This so-called great resignation was largely about finding a better gig rather than not wanting a job, economists said.
About 50.5 million people quit in 2022, besting the prior record set in 2021.
“The pandemic gave workers more leverage than they’d ever had,” said Julia Pollak, chief economist at ZipRecruiter.
The dynamic has changed, however. The U.S. labor market has gradually cooled, staffing shortages have become less of an issue and workers appear more nervous about the job outlook, Pollak said.
In short, the labor market is returning to normal, and the balance of power has shifted, she said.
While workers are unlikely to be “handed jobs on a platter” anymore, conditions remain favorable for them, Pollak added.
“There’s good normal and bad normal,” she said. “We’re still very much in the ‘good normal’ world.”
Conditions are still favorable for job seekers
It’s unclear if the labor market will cool further from here. The Federal Reserve forecasts a mild recession later this year, for example. That outcome is not assured, of course.
In fact, certain metrics in the BLS’ JOLTS report suggest the job market became somewhat more favorable for workers in April. Job openings — a proxy for employer demand for workers — increased to 10.1 million after three consecutive months of declines, for example.
While quits and job openings told different labor market stories in April, quits are generally a less volatile and more reliable indicator, economists said.
“Looking at the hard economic data, things are still fairly strong” for job seekers, Zhao said.
Due to economic uncertainty, however, it’s “more important than ever” for workers to do their research before accepting a job, he added.
That might mean researching the financial stability of the company to which they’re applying and whether the company has had recent layoffs, Zhao said. It may also mean reaching out to company employees in their job network to gauge sentiment and confidence, he added.
The Federal Trade Commission last week issued an alert warning consumers to beware of fake job advertisements posted by scammers. They repurpose outdated ads from real employers and trick applicants into sending them money, the FTC said.