Why the Fed wants you to quit your job
Economists want you to quit your job.
Growing ranks of Americans are quitting their jobs. But the economy needs even more quitters.
Paul Swoish was working for daily-deal company LivingSocial last year when he found out his sales job was going get eliminated in a few months. But rather than wait things out, he just quit -- and started looking for a new job.
“I didn’t want to sit in a job that didn’t have faith in what our department could do,” he says. “I’m going to get a jump start on my career search. My managers were very supportive.”
Swoish says he was confident he could find something else, though he wouldn’t have dared make such a move during the recession.
“But now I do see the economy getting better. Definitely not as worried as I would’ve been a few years ago,” he says.
Quitting can be good. Guy Podgornik, an economist at the Bureau of Labor Statistics, keeps track of how often people like Paul Swoish quit their jobs. It’s called the "quits rate."
“When do people quit their jobs? They quit their jobs when they’re moving to another job or they think another job is out there and available for them,” he says. “It’s a good indicator of where the economy is and what people’s perceptions are.”
In February, the latest month for which data are available, the "quits rate" was 1.7 percent. That means 1.7 out of every 100 employees quit. That’s up from 1.2 percent 2009, but it’s still shy of where it was before the recession: 2.1 percent.
“The 'quits rate' is still very low,” says Chris Low, chief economist with FTN Financial. “It has risen since the Great Recession but it hasn’t risen as quickly as it has in the past.”
He says the Federal Reserve is closely watching the "quits rate" as it monitors the health of the labor market. Unfortunately, Low adds, the current rate “is entirely consistent with a job market that’s steadily getting better but still has a long way to go and isn’t getting better as rapidly as anyone wants.”
Paul Swoish, formerly with Living Social, can attest to that. Four months after he quit, he is still looking for a new job.
The above chart shows the quit rate for the past decade. Click through to view a breakdown by industry.