‘Great Resignation’ Not That Great After All, Fed Study Says

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High levels of workers quitting their jobs -- dubbed the “Great Resignation” -- may not be that rare after all, according to the latest Economic Letter from the Federal Reserve Bank of San Francisco.

“Evidence from both recent worker surveys and historical data on quits shows that the ‘Great Resignation' is not as unusual as one might think,” wrote Bart Hobijn, a visiting fellow with the regional Fed's research department and a professor of economics at Arizona State University.

The so-called quits rate, which measures voluntary job leavers as a share of total employment, remained near a record at 2.9% in February. Roughly 4.4 million Americans quit their jobs in the month, according to Labor Department data back to 2000.

That high reading has been cited by Fed officials as a sign of a very tight U.S. labor market -- alongside an unemployment rate that fell to 3.6% in March -- which is pushing wages up. The central bank also touts those metrics to argue the job market is strong enough to handle interest rate hikes to confront the hottest inflation in 40 years.

But Hobijn argues that prior to 2000, high waves of quits had actually been quite common during rapid economic recoveries in the postwar period, based on the Manufacturing Labor Turnover Survey, which was discontinued in 1981.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he said. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Still, while he suggests that employers will have more success filling open positions, which should ease upward pressure on wages, he doesn't see that happening until late 2022.

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