- The number of people who quit their jobs fell 12% last year, new data shows.
- That could be a sign that workers feel less confident about the state of the labor market.
- Forecasters warn the unemployment rate could tick up in 2024 as the economy slows.
Friday’s blowout jobs report confirmed the labor market is still holding firm, but one often-ignored statistic could signal a looming slowdown.
Bureau of Labor Statistics data published Tuesday showed that only 3.4 million people resigned in December — the lowest number of quits recorded since the pandemic brought about the “Great Resignation.”
The figures mean the quits rate fell 12% between 2022 and last year.
Some economists believe workers’ reluctance to quit indicates that confidence in the labor market is waning, which could herald a future slowdown.
Quits dropping to a four-year low shows that “workers feel less confident about replacing their jobs amidst slower hiring,” said Interactive Brokers’ José Torres.
Ian Shepherdson of Pantheon Macroeconomics argued that the data might also be bad news for anyone asking for a pay rise. When people are unwilling to resign, they tend to lose some of the bargaining power they could use to ask for higher wages.
“Job openings don’t matter; the quits rate does,” he wrote in a research note. “The second straight 2.2% quits rate — just below the pre-Covid level — is more important, because it clearly signals slower wage gains.”
Grumpy staying
Falling quit rates form a part of the “grumpy staying” trend. Many workers feel they can’t resign, even if they’re unhappy in their role.
The number of job openings has cooled from a peak of more than 12 million in March 2022 to 9 million as of last month, according to the Bureau of Labor Statistics’ most recent JOLTS survey, while the number of people looking for employment has risen in the aftermath of the pandemic.
That makes for a more competitive labor market where employees have less leverage, meaning it’s less likely they’ll be able to negotiate better pay or benefits when switching jobs.
“After the pandemic, companies were poaching each other’s workers so much that people sometimes quit without having the next thing lined up,” Boston Consulting Group chief economist Philipp Carlsson-Szlezak told Business Insider. “All that air is coming out of the labor market, even though hiring remains strong.”
Tech and media companies ranging from eBay to Okta to the Los Angeles Times have also kicked off the year with layoffs, further fueling Americans’ unease about the job market.
Unemployment fears
Optimists would point to the fact that unemployment held below 4% last year despite the Fed’s most aggressive rate-hiking cycle since the 1980s.
But the Congressional Budget Office expects the unemployment rate to climb from 3.7% to 4.4% over the next 12 months as the economy finally feels the brunt of the Fed’s rate rises.
“The job market is steadily returning to its pre-pandemic self,” Morningstar’s Preston Caldwell said in a research note. “Although the slowdown in job growth paused in the second half of 2023, we expect it to renew as 2024 unfolds.”
If that slowdown plays out, expect more layoffs, fewer job openings — and even fewer workers choosing to quit.
