The number of Americans voluntarily quitting their jobs rose to a record high in September while job openings stayed stubbornly above pre-pandemic levels.
It’s a sign, observers said, that businesses may have to continue to raise wages in order to attract workers.
The Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS report, released on Friday, reflects an uneven economy – demand remains strong, but with labor and goods shortages, overall inflation has seen its biggest annual gain in 31 years.
Wage inflation shows few signs of abating even as the daily case rate of coronavirus infections ebbs. Employers in almost every industry are competing to lure workers and three million fewer people are in the labor force compared to pre-pandemic levels.
The scramble for workers boosted wage growth to an annual increase to 4.9% in October, although this has been outstripped by overall inflation.
That means real earnings have dipped.
A separate survey by the University of Michigan, also released on Friday, showed consternation among consumers with sentiment on the economy falling to a decade low. Few believe policymakers are taking sufficient steps to tackle inflation.
Job departures rose by about 164,000 in September, lifting the total to a record high of 4.4 million. The quits rate is seen as a good measure of labor market confidence as workers leave when they are more secure in their ability to find a new job.
There were 56,000 people who quit in the arts, entertainment and recreation industry, while 47,000 left in the “other services” category. State and local government education saw 30,000 departures.
“The continued surge in quits points to wage growth of between 4.5%-5.0%, well above rates that would be consistent with inflation falling sustainably back towards the Fed’s 2% target,” said Michael Pearce, senior U.S. economist at Capital Economics in New York, of the report.
The Federal Reserve has so far resisted calls to take stronger action to combat higher-than-expected inflation, arguing that it remains transitory even if it persists well into next year.
Job openings, a measure of labor demand, edged down by 191,000 to 10.4 million on the last day of September. Hiring also remained largely unchanged at 6.5 million in September.
The number of job openings was little changed in all four regions with vacancies increasing most in healthcare and social assistance, and state and local government, excluding education.
Fewer Americans are feeling better about the economic outlook, at least in the short term. U.S. consumer sentiment plunged in early November to the lowest level since November 2011 as surging inflation cut into households’ living standards, the University of Michigan’s consumer sentiment survey showed.
Its index dropped to 66.8 in its preliminary November reading after the previous month’s final reading of 71.7. Economists polled by Reuters had forecast a reading of 72.4.
(Reporting by Lindsay Dunsmuir and Dan Burns; editing by Andrea Ricci)