Tell us about your experiences with Marketplace. Enter To Win
Daily Pulse

Low job ‘churn’ hurting economic recovery

Joel Patterson Feb 8, 2012

The Pulse slowed today on news that fewer Americans are quitting their jobs. It sounds counterintuitive, but what economists call “churn” — when an employee leaves, thus opening a spot for someone new — is actually a sign of a healthy job market.

When someone quits, they make way for promoting and hiring. New employees bring new skills and ideas, and those lead to greater profits. In fact, historically, high churn rates among American workers are often cited as key underlying factor in the country’s economic success.

The Wall Street Journal reports today that just two million of us gave our two-weeks notice in December, down a third from pre-recession averages. Two and a half years after the “end” of the Great Recession of 2007-09, American workers have become risk averse when it comes to big career decisions.

“Quitting, hiring and firing are all part of churn — job turnover that, unlike layoffs or expansions, doesn’t change the long-term size of a company,” Ben Casselman writes in the Journal today. “Churn makes up a huge part of the job market’s daily turnover. A recent paper by researchers at Stanford University and the Bureau of Labor Statistics found that during the 2007-2009 recession, 80 percent of the reduction in hiring was associated with lower levels of churn, rather than with a decline in job creation.”

As the U.S. economy finds its feet again, experts will be looking at our willingness to swap jobs as a sign of a bona fide recovery. One question remains. Which comes first: jobs or our willingness to leave them?

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.