In September, 3.6 million people quit their jobs, just below the record high 3.65 million job quitters we saw in August. The overall quits rate for the private sector in September held at 2.4% for the third month in a row, matching a 17-year high.
Quits are seen a positive economic indicator, with the thinking being that folks won’t leave a job unless they are reasonably confident they could easily get another one.
With the unemployment rate currently at 3.7% and the economy continuing to create in excess of 200,000 jobs per month, the headline data about the labor market suggests things are very good for American workers right now. The quits data add more depth to that assertion.
Wage growth?
Looking below the headline quits numbers and the picture gets even better: It portends more wage growth.
Matt Busigin, a portfolio manager at New River Investments, noted Tuesday that the number of quits in the accommodation and food services industry hit a record high of 709,000 in September. As a percent of people employed in the industry the quits rate hit 5.1% in September, its highest level since November 2007.
And if you track non-supervisory wage growth alongside the quits rate in the food services business, you get a pretty good sense of where wages are going — up. In October, average hourly earnings for all employees rose 3.1% and for non-supervisory workers wages rose 3.2% over last year. These were the highest readings since the spring of 2009, when wages were on the way down as the post-crisis recession deepened.
For years, economists have said that wage growth was the missing element of the post-crisis recovery. But now, wage growth appears to be here. The question then is, what’s next?
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland