As many followers are aware, we poll our clients, candidates and strategic partners relentlessly to help the business community with relevent statistics that form informed decision-making.
Lets start wit this:
More people quit their jobs in the past three months than were laid off.
This is a sharp reversal after fifteen straight months in which layoffs exceeded voluntary departures. The trend suggests the job market is finally thawing.
Some of the quitters are leaving for new jobs. Interestingly, others have no firm offers. But their newfound confidence about landing work is itself evidence around confidence of more hiring – and, a strengthening economy.
“There is a century’s worth of evidence that bears out this view that quits rise and layoffs fall as the job market improves,” said Steven Davis, an economist at the University of Chicago.
Still, the number of people quitting their jobs is nowhere near what it was before the recession. Economists expect the improvement in the job market to be fitful, rather than consistent. In May, for example, private employers added only 41,000 net jobs after adding 218,000 in April.
Yet the long-term trend points to an improving job market. The economy has created a net 982,000 jobs this year after a recession that wiped out more than 8 million of them.
The government said Tuesday that the number of people quitting rose in April to nearly 2 million. That was the most in more than a year and an increase of nearly 12 percent since January. That compares with 1.75 million people who were laid off in April, the fewest since January 2007, before the recession began.
During the depths of the recession, workers were hesitant to quit – and, not only because jobs were scarce. Even if they found a new job, some feared that accepting it would leave them vulnerable to a layoff. At many companies, layoffs follow a simple formula: Last hired, first fired.
“Many clung to their jobs out of fear”, said David Adams, vice president of training at Adecco, a national staffing agency. When Adecco tried to recruit workers to fill open positions, it frequently ran into the same obstacle: Few workers felt like betting on a new job that might soon disappear.
Not so much any more. Adecco is seeing more employed workers seeking interviews, rather than laid off workers searching for a lifeline.
“The hangover is kind of over,” Adams said. “It’s really starting to move toward a market where the employee can have a lot more confidence making a move.”
That’s why Katie Charland just quit her job at a parenting magazine in Phoenix to take a position with a nonprofit that supplies children’s educational programs.
Optimism was rare in 2008 and 2009, when employers cut more than 8 million jobs, sending the unemployment rate to a 26-year high of 10.1 percent. The number of people who quit fell 40 percent to 1.72 million in September 2009. That was the fewest since the government began tracking the data in 2000. It was down from nearly 2.9 million in December 2007, when the recession began.
Studies have shown that worker morale fell during the recession. Productivity rose as companies squeezed more work out of their employees. That points to a reason quits may keep rising: Overworked employees could jump at the chance to switch jobs as new opportunities arise.
“There is going to be a mass exodus of the top performers as the economy starts to turn around,” predicts Razor Suleman, a consultant who helps companies retain their best workers.
About 25 percent of companies’ top performers said they plan to leave their current job within a year, according to a survey published in the May edition of the Harvard Business Review. By contrast, in 2006, just 10 percent planned to leave their jobs within a year. The survey questioned 20,000 workers who were identified by their employers as “high potential.”
Companies retained those workers during the recession but heaped more work on them, said Jean Martin, the study’s co-author and executive director of the Corporate Executive Board’s Corporate Leadership Council in Washington. At the same time, employers cut back on awards and bonuses, she said.
Now, top performers at some companies are heading for the exits as hiring picks up. It means companies will feel more pressure to retain them.
“These rising stars know what they’re worth,” Martin said. “They feel somewhat neglected.”
So… It appears that more people are now taking a leap that few dared just a few months ago: Quitting without a new job waiting. The improving economy has given them confidence.
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