Record 4.3 million Americans quit their jobs in August, new data show

People are quitting their jobs in unprecedented numbers around the country. 4.3 million Americans quit their employment in August, according to figures issued by the US Bureau of Labor Statistics on Tuesday. The number of people quitting their jobs in the United States has risen to 2.9 percent of the workforce. The BLS Job Openings and Labor Turnover Survey series has never reported a higher percentage.

To put August's figures in context, the number of people quitting their jobs increased by 242,000 from July — and by about 1.3 million since August 2020, when nearly 3 million people departed their jobs.

People are quitting their jobs, according to experts, as workers across the country seek higher compensation, better working conditions, and vital help in their everyday lives.

"There is no 'labor shortage.' There's a child care shortage, a living-wage shortage, a hazard pay shortage, a paid sick leave shortage, and a healthcare shortage," Robert Reich, UC Berkeley professor of public policy and former U.S. Secretary of Labor, wrote on Twitter Tuesday. "Until these shortages are remedied, Americans won't return to work anytime soon."

Furthermore, towards the end of August, there were 10.4 million job opportunities, down 659,000 from July. 10.4 million people is still a large number, especially when compared to the previous year. There were around 6.5 million job opportunities in August 2020. The huge number of job vacancies, according to Julia Pollak, chief economist at ZipRecruiter, can contribute to the high quit rate.

"There are now about 50% more job openings than there were before the pandemic," she told. "Someone who was passively looking for a new job before might have seen five or six job postings that are relevant. Now they're seeing 10 or more. There's just more attractive alternatives."

Pollak agreed that these job shifts could have good consequences, such as increased pressure on businesses to promote healthier work environments and competitive pay and benefits, for example.

Since the beginning of the epidemic, there has been a huge surge in demand for distant roles, according to Pollak. More than half of all job candidates surveyed by ZipRecruiter want to work from home.

"That's a staggering number because typically only about 10% of jobs offer that opportunity," she said. "Only about 37% of jobs in the U.S. could theoretically be done from home. The majority of jobs must be done in person, on-site... [And] those major industries that require people to work on-site, in close contact with other people, those are the ones that have seen the steepest increases in quits."

The rate of total separations (including quits, layoffs, and discharges) countrywide increased from 3.9 percent in July to 4.1 percent in August, according to a recent JOLTS data. In August, the industries with the highest separation rates were lodging and food services, leisure and hospitality, and retail commerce.

In August, the number of new jobs fell to 6.3 million, down 439,000 from July. The rate of layoffs and discharges fell marginally in August, from 1% in July to 0.9 percent.

Will these patterns persist? It's critical, according to Pollak, to plan for long-term consequences.

"Anyone who expects that these things will be really short-lived and transitory has been proved wrong," she said. "[Think of] the companies that told their workers to go work from home in March (2020) for the next two weeks — there's two weeks clearly turning into two years, and possibly more. So this is not just a short term issue."

Why Are Hundreds of Millions of Americans Leaving Their Jobs?

Better pay and the threat of COVID are two causes.

People often leave employment when they already have another or are confident in their ability to obtain a new one, so workers quitting is typically considered as a positive indicator for the labour market. The huge increase in August likely reflects the reality that many workers believe they may obtain higher compensation elsewhere because firms are desperate for people and rising rates.

However, the fact that the increase in quits was concentrated in industries with frequent public contact suggests that COVID fear played a significant effect. Many people may have left even if they had no other options.

"The August JOLTS report shows employers and workers were anxious about the rising Delta COVID-19 wave two months ago," Robert Frick, corporate economist at the Navy Federal Credit Union said in a note. "Workers quit, especially in retail, at a record rate to avoid exposure to possible infection. Job openings dropped, especially in leisure and hospitality, as travel dropped markedly due to Delta," Frick said. 

The government reported Friday that hiring slowed for the second month in a row in September, with only 194,000 jobs gained. Economists had predicted a job creation of around 490,000 people.

"Temporary speed bump"?

The unemployment rate in the United States dropped to 4.8 percent from 5.2 percent, thanks to a mix of unemployed workers finding work and those exiting the labour field, which means they are no longer recognised as unemployed because they are not actively looking for new work. In September, the labor-participation rate, which measures how many individuals are working or looking for employment, fell to 61.6 percent, down from 61.7 percent in August.

The Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday gives a more thorough view of the labour market. After job gains and quits, retirements, and layoffs are taken into account, the hiring recorded on Friday is a net total. The raw numbers are included in Tuesday's report, and they show that total hiring decreased considerably in August, from 6.8 million in July to 6.3 million in August.

In the long run, experts say the August slowdown does not necessarily portend a lasting deterioration. What is certain is that the epidemic continues to be a defining element in the revival of the labour economy.

"The question is whether this is a temporary speed bump due to a surge in COVID cases or if demand will continue to slacken in the months ahead," said Bunker.

"The Delta wave didn't reach its peak until mid-September, so the September JOLTS report may also carry bad news. But given the decline in cases and deaths underway, this month may see a strong turnaround in the numbers," Frick said.