The economy responds to consumer fear and confidence, and confident workers quitting their jobs in search of something better signal to economists that things are looking up.
Sometimes quitting is good.
In a sharp reversal from the previous 15 months, more people quit their jobs in the past three months than were laid off. And that’s a good sign, economists say.
“In general, that’s a sign of better economic times,” says Donald Siegel, dean of the school of business at the University at Albany, part of the State University of New York. “I interpret it as a sign of an improving job market … when people feel confident enough to quit their jobs."
Nearly 2 million people quit their jobs in April, the highest number of resignations in more than a year, according to the Bureau of Labor Statistics (BLS). By contrast, 1.75 million people were laid off in April, the fewest since January 2007.
February, March, and April figures mark the first time since late 2008 that more people quit their jobs than were laid off.
Employers cut more than 8 million jobs in 2008 and 2009, sending the unemployment rate to a 26-year high of 10.1 percent. As unemployment spiked, the number of people quitting plummeted to 1.72 million in September 2009, the lowest number the government has seen since it started tracking the number in 2000.
Resignations generally outnumber layoffs in a healthy economy. During recessions, people are hesitant to quit because jobs are scarce, says John Wohlford, an economist with the BLS.
“Especially in a recession, people tend to hang on to jobs,” says Mr. Wohlford. “If people start quitting, we can interpret that as workers getting more confident in their ability to get jobs…. Generally speaking, when the labor market recovers and employment goes up, quits also go up.”