A record 4.5 million Americans quit their job in March as the US labor market shows no signs of cooling off.
That’s the highest number ever recorded since the government started tracking quits data in 2000, but it doesn’t necessarily mean that employees are abandoning the workforce in droves. Rather, they are likely finding better-paying jobs in what some economists are calling “the Great Renegotiation.”
Most of the workers who quit in March were employed in industries that are now booming after a pandemic-induced slump, including shipping and transportation and leisure and hospitality, data released by US Bureau of Labor Statistics Tuesday show. As they struggle to attract new staff, employers in those industries have been offering large wage increases, giving workers an incentive to switch jobs.
US workers have the upper hand—for now
Other indicators suggest that workers are reshuffling, not dropping out of the labor force. In the first three months of 2022, the US added a total of 1.7 million jobs, and the employment to population ratio for prime age workers—the share of 25 to 54 year-olds with a job—moved up to 80% from 70% in April 2020. Meanwhile, the share of people being laid off is near historic lows.
“Workers continue to take advantage of the tight labor market,” wrote Nick Bunker, an economist at Indeed.
Even as the number of quits jumped in March, the labor market shouldn’t get too much tighter than it is now. That’s because the pace at which people are leaving their jobs has slowed down somewhat from last year, said Bunker. “The temperature of the labor market is hot, but the temperature isn’t rising,” he added.