According to the Labor Department, 4.3 million workers quit their jobs in August. That represents almost 3 percent of the entire U.S. labor force and is the largest number of workers quitting their jobs in one month in history.
Nearly 900,000 of those workers were employed in the restaurant industry. Another 720,000 were employed in retail, 700,000 in business services, and 534,000 in health care.
While the data do not reveal the reasons why so many workers quit their jobs in August, it’s assumed by economists that workers are less willing to endure inconvenient hours, low compensation, or bad conditions because they know there are ample opportunities elsewhere.
The job posting rate as a percentage of the workforce fell to 6.6% in August from 7% in July. That level was just 4.4% a year ago as the economy was still struggling to escape the Covid downturn.
However, quits hit a new series high going back to December 2000, as 4.3 million workers left their jobs. The rate rose to 2.9%, an increase of 242,000 from a month ago. Quits are seen as a level of confidence from workers who feel they are secure in finding employment elsewhere.
Coming out of the pandemic, workers have unprecedented leverage. This is especially true in what used to be termed “entry-level” jobs but are now just considered low-wage.
The labor market is still down about five million jobs from where it was before the pandemic and economists say it has to make up even more than that to stage a full recovery, given the growth that would have occurred in a normal economy in the nearly year and a half since the pandemic started.
Employers in many industries, including hotels, restaurants and construction, have been complaining about difficulty hiring workers after the pandemic upended the labor market and revealed the precarity of many low-wage jobs.
Republican officials in many states sought to address the issue by curtailing federal unemployment benefits this summer, but those cuts seem to have done little to resolve the issue. In September, the country added just 194,000 jobs despite the record numbers of openings.
The combination of a sharp drop in job openings and a 242,000+ increase in the number of people quitting their jobs indicates there may be big trouble ahead. The workers who quit their jobs may be betting on the wrong horse. Yes, they may have leverage now. But what about one or two months down the road? Employers may simply learn to make do with fewer employees, leaving some of those people behind.
If that’s the case, a lot of those workers may end up wishing they hadn’t quit in the first place.