By Nathalie Voit

As of Sept. 30, there were 10.4 million open jobs in the U.S. economy as the “quits rate,” or the measure of workers leaving their jobs as a share of overall employment, rose to a record high 3%, according to a Bureau of Labor Statistics report (BLS) from Nov. 12. 

According to the Job Openings and Labor Turnover report, hires and total separations in September stagnated at 6.5 million and 6.2 million, respectively. The number of job openings (10.4 million) barely budged. 

The sectors with the highest job openings were health care and social assistance (+141,000), state and local government, excluding education (+114,000), wholesale trade (+51,000), and information (+51,000). Job openings fell in state and local government education (-114,000), real estate, rental, and leasing (-65,000), and educational services (-45,000).

The hiring rate stagnated at 4.4% or 6.5 million new hires. Hiring increased in health care and social services (+109,000) and finance and security (+60,000). Hiring declined in state and local government education (-92,000) and educational services (-89,000). 

Total separations, including quits, layoffs, and discharges, remained little changed at 6.2 million, or 4.2%. Within separations, the number of people voluntarily leaving their jobs rose by 164,000 to 4.4 million in September or 3.0%. Layoffs and discharges remained unchanged at 1.4 million, or 0.9%. Other separations, including transfers to other locations within the same company, were little changed.

The BLS defines quits as “voluntary separations initiated by the employee.” The 3.0% quits rate was driven by employees exiting jobs in arts, entertainment, and recreation (+56,000), other services (+47,000), and state and local government education (+30,000). Overall, the western region of the country saw the greatest increase in quits. 

Layoffs and discharges, also known as “involuntary separations initiated by the employer,” remained unchanged at 1.4 million, or 0.9%. 

Other separations, which include occupational exits due to retirement, death, or disability, in addition to transfers within the same firm, remained little changed in September at 410,000. Other separations rose in finance and security (+41,000) and state and local government education (+13,000). 

Over the year ending in September 2021, total hiring sat at 73.3 million, and total separations at 67.7 million, resulting in a net employment gain of 5.6 million. The figures may include employees who have left the workforce and later rejoined more than once over the year, reads the report. 

“The vast majority of the quitting we’ve seen in 2021 has been job switching,” said an economist at Indeed, Nick Bunker. “Industries that usually hire people out of work may have shifted their approach towards poaching.”

A high quits rate is a sign of worker confidence and elevated bargaining power in the labor market. Positions are expected to remain available through the holiday season as firms struggle to compete for workers. In an effort to attract human capital, businesses have offered better pay and more benefits. 

“Employers are trying harder—a lot more places are offering starting bonuses,” said Rucha Vankudre, senior economist at Emsi Burning Glass, a job market analytics firm.

Higher wages may be good for workers, but if wage hikes go unchecked, the economy risks descending into a dreaded “wage-price spiral.” According to the Labor Department, inflation is now at a 31-year high, increasing by the fastest since 1990. 

“Price increases stemming from ongoing supply chain bottlenecks amid strong demand will keep the rate of inflation elevated,” said an economist at Oxford Economics, Kathy Bostjancic.

“While we share the Fed’s view that this isn’t the start of an upward wage-price spiral,” she said, “We look for inflation to remain persistently above 3% through mid-2022.”