Chart of the Week: Quit Rate & Wage Growth

Chart Quit Rate and Wage Growth

When looking at the domestic macroeconomic picture, one of the biggest areas of focus is the labor market. This is due to the fact that when jobs are abundant and wages are rising, consumers are more likely to spend and thus stimulate economic activity. While the most popular labor market indicators are the growth in payrolls, wages, and job openings, we also like to pay close attention to the quit rate. The quit rate shows the rate at which workers are voluntarily leaving their jobs. While this may seem like an obscure data point, in actuality it provides tremendous insight. If individuals are voluntarily leaving their jobs, it shows that they have great confidence in the labor market and their prospect for landing a more attractive job. In addition, a rise in the quit rate is also a leading indicator for stronger wage growth.

As you can see in the chart above, the quit rate has moved significantly higher in recent years and is now just below post-recession highs. This has coincided with a sharp increase in wage growth, after years of subpar gains. Along with other key labor metrics, the quit rate is showing that the labor market is still quite strong and labor market participants are increasingly confident. We will continue to monitor the quit rate for signs that confidence in the labor market is shifting.