Quit Rate

The quit rate is the monthly share of workers who voluntarily resign from their jobs, expressed as a percentage of total employment. Rising quits signal worker confidence in finding new work and are one of the earliest warnings that labour markets are tightening and wage pressure is building. Falling quits suggest fear, economic uncertainty, and workers locked in place by weak job prospects.

The quit rate as a leading indicator

Workers quit when they have a better option in sight. If the quit rate rises from 1.8% to 2.2%, it means workers are seeing opportunities: competitor firms are hiring, wage offers are improving, or the job market feels secure enough to risk a transition. Conversely, if the quit rate falls to 1.5%, workers are afraid to leave; they may be unemployed in a month or two, so they cling to current work even if it pays poorly or demands too much.

This makes the quit rate an exceptional early signal. Unemployment is a lagging indicator—it reflects job losses that happened weeks or months ago. The Employment Cost Index is released quarterly and is a lagging summary of wages already agreed. But the quit rate is monthly and forward-looking: it reveals what workers expect about their future job prospects and wage bargaining power. A rising quit rate often precedes wage-growth acceleration by several months. A falling quit rate often precedes job losses and recession.

The Federal Reserve watches the quit rate closely. A sustained rise (say, from 2.0% to 2.3% and holding) is an early warning that labour hoarding has ended and firms are bidding for workers again. This typically triggers a shift in monetary policy toward rate increases, because wage pressure soon follows. A falling quit rate can trigger rate cuts, signalling that labour-market slack is returning and wage pressure is cooling.

Why workers quit: wages, culture, opportunity

Workers leave jobs for several reasons. Some quit for higher pay elsewhere—a firm offering 10% more is irresistible. Some quit for better conditions: remote work, fewer hours, less management stress, or a role using skills they prefer. Some quit as layoffs threaten and they want to jump before the axe falls. In recessions, quits are few and fearful; in tight labour markets, quits are plentiful and opportunistic.

The composition of quits matters. In the early stages of a tight labour market, quits are often from lower-wage sectors (retail, food service) where workers have many options and can afford to try new things. As labour markets tighten further, even mid-career professionals start quitting, suggesting widespread tightness. If quits from finance or engineering spike, the central bank is likely to raise rates soon, because those sectors typically drive economy-wide wage growth.

Quits versus layoffs: the labour-turnover mix

The quit rate is only one part of labour turnover. The full picture includes layoffs, discharges, and hires. In recessions, quits fall sharply while layoffs spike—workers are forced out, not leaving by choice. In expansions, quits rise and layoffs fall—workers are being pulled up the labour ladder, not pushed down. By tracking both, policymakers can tell whether employment changes are demand-driven (firms hiring, workers quitting to climb the ladder) or supply-driven (firms cutting, workers hunted).

During the 2008–2009 financial crisis, the quit rate fell to 1.2%, a historic low. Workers dared not leave because layoffs were everywhere. By 2018–2019, the quit rate hit 2.4–2.5%, the highest in years, signalling extreme labour tightness. Workers could quit Monday and have three job offers by Friday. This environment drove wage growth and inflation, contributing to the Federal Reserve’s decision to raise rates.

The relationship to wage growth and inflation

Quit rates and wage growth move together, though the quit rate typically leads by a quarter or two. When workers are confidently quitting, firms must raise wages to retain and recruit. The Employment Cost Index rises. If the quit rate remains elevated for six months, firms have accepted higher wage growth as a cost of doing business. This feeds into core inflation through service sectors (healthcare, hospitality, professional services) where labour is the dominant cost.

Some economists use the quit rate to forecast wage inflation. A quit rate above 2.2% for two consecutive months is a strong signal that wage-growth acceleration is coming. This is why the Federal Reserve and financial markets watch JOLTS (the Job Openings and Labor Turnover Survey) religiously. A surprise jump in quits can shift rate-hike expectations overnight.

Sectoral and demographic variation

Quit rates vary sharply by industry and age. Hospitality and food service have quit rates routinely above 3% even in normal times, because these sectors are low-wage, physically demanding, and have high non-wage worker turnover. Professional services (finance, tech, law) have lower baseline quit rates but see sharp moves in response to labour-market shifts. Young workers (age 20–30) quit at roughly twice the rate of older workers; they are still job-shopping and building careers, so they are more likely to jump for a 15% wage bump. Older workers (age 55+) quit less, especially in downturns, because they value job stability and approaching retirement.

During the 2020–2022 “Great Resignation,” quit rates spiked across all sectors and age groups, suggesting economy-wide tightness and widespread worker reassessment of work versus life balance. Some of the spike was permanent (workers exiting the labour force entirely, retiring early, or moving to lower-wage but more flexible roles); some was compositional (low-wage workers shifting to higher-wage opportunities). The elevated quit rate persisted longer than historical norms, puzzling some forecasters who expected sharp reversions to mean.

Reading quit-rate announcements and surprises

The quit rate is released monthly in the JOLTS report, typically the first week after month-end. Expectations are usually pinned to the prior month’s rate or to a range (e.g., 2.0–2.2%). A surprise jump (e.g., 2.0% rising to 2.3% when 2.1% was expected) is treated as a hawkish surprise, signalling tighter labour markets and justifying rate increases. A surprise fall (e.g., 2.2% falling to 1.9%) is dovish, signalling loosening labour-market conditions and potential room for rate cuts.

Equity markets react sharply to quit-rate surprises. A hot quit rate weighs on growth stocks and bonds (rate increases likely) but supports value stocks and inflation hedges. For fixed-income investors, a rising quit rate is a warning: labour inflation is coming, and the central bank will likely slow growth. Understanding the quit rate can mean the difference between catching a trend early and being blindsided by policy shifts.

See also