In 2017 American workers were more willing and able to quit their jobs for better pay. This bodes well for future pay increases
A couple of weeks back, I wrote about the prospects for wage growth in Minnesota. With economic growth going along at a decent pace and the labor market tightening, recent rises in nominal wages should feed through into rises in real wages, provided the Fed does its job of keeping inflation in check.
Data released by the Bureau of Labor Statistics this week gives another encouraging sign.
According to data from the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey, job openings and hires continued an upward trend in 2017, with the job openings level at its highest since the series began in December 2000. Similarly, annual hires and quits levels increased over multiple years and throughout 2017.
…In September 2017, the job openings level was 6.2 million, the highest monthly level since the job openings series began in December 2000. The annual hires level increased from 63.2 million in 2016 to 65.3 million in 2017. The annual total separations level increased from 60.9 million in 2016 to 63.0 million in 2017.
Within total separations, quits rose from 36.3 million in 2016 to 38.2 million in 2017. Layoffs and discharges increased slightly from 20.2 million in 2016 to 20.7 million in 2017. Other separations decreased from 4.4 million in 2016 to 4.2 million in 2017.
In other words, in 2017 more people were quitting their jobs to go somewhere else.
This reflects increased optimism about the economy from American workers. If they feel that the economy or labor market is slack, they will tend to stay where they are. The fact that they are more willing to say ‘So long’ in search of a better offer suggests that they see greener grass over an increasing number of fences.
It also bodes well for future wage growth. If employers are dealing with workers who are more willing and able to leave in search of better pay and conditions, it will force those employers to offer better pay and conditions themselves.
There has been a lot of positive economic news recently. This is one more part of the picture.
John Phelan is an economist at the Center of the American Experiment.