Over 3.4 million people in the US quit their job in February. They might be regretting it.
Since that month, the US lost over 12 millions jobs, and the unemployment rate rose from 3.5% to more than 16%. Without much of a possibility of greener pastures, an unusually low number of Americans, 1.8 million, quit their jobs in April, according to recently released data from the Bureau of Labor Statistics. It was the fewest quits in any month since July 2010. The overall share of employed people who quit their job fell from 2.3% in February to 1.4% in April.
It might seem counterintuitive, but a low quit rate is very bad news. Quit rates are a leading indicator of the health of the labor market. When more people voluntarily leave their jobs, it means there is a general sense of optimism about the future of the economy. In 2009, during the height of the Great Recession, quit rates fell to 1.2%. After ten years of economic recovery, the quit rate reached 2.4% in 2019, the highest it had been since the late 1990s. (The US is one of the few countries to report quit rates, but it is very likely that they are plummeting across all countries with growing unemployment.)
Right now, most employees are just looking to hang on to the work they do have, rather than trying to find something better. This is particularly true of people in the retail and hospitality industries, areas that have been hit hardest by the coronavirus-led recession.
Fewer people quitting their job also has the effect of dampening wages. People who move jobs get an average bump of 6% in salary. Economists believe this increase is usually because people find work that better suits their skills and makes them more valuable. The weak job market means more people are stuck in jobs that don’t fully take advantage of their talents, and are generally less satisfied.