Worker Retention

In February, quits remained higher than pre-pandemic, as workers pursued better wages and working conditions in a strong job market.

Quits rate by industry, U.S.

Dec 2000 - Feb 2023

Source: Bureau of Labor Statistics. Notes: The quits rate is the number of quits during the entire month as a percent of total employment. Quits include employees who left voluntarily, except retirements or transfers to other locations. Data is seasonally adjusted. Feb 2023 data is preliminary.

Buoyed by a tight labor market, nearly 50 million American workers quit their jobs over the last 12 months in search of better wages and working conditions. In February alone, 4 million workers quit jobs. Quits rates were highest in the leisure and hospitality (5.6% in February) and retail (3.6% in February) where wages are typically low. The labor market will likely remain constrained for the foreseeable future with approximately 800,000 fewer workers due to excess deaths (Excess deaths).¹

The Federal Reserve’s efforts to tame inflation by raising interest rates is aimed at reducing employment growth and increasing unemployment to bring down wage levels.² When unemployment increases, low-wage workers historically have borne the brunt of job losses. Moreover, recent inflation has been driven by several factors, including supply chain breakdowns and corporate profits surging – neither of which will be corrected through rising interest rates.³ The Inflation Reduction Act and the CHIPS and Science Act aim to reduce inflation by addressing supply chain issues, while containing key healthcare costs.^4,5 Meanwhile, the 12-month inflation rate has been decreasing steadily (down to 5% in March 2023) since June 2022 when it was 9.1%.⁶

1. “Who’s missing from the post-pandemic labor force?” Bauer, Edelberg, Estep, and Hershbein. Brookings. April, 2023. https://www.brookings.edu/2023/04/04/whos-missing-from-the-post-pandemic-labor-force/

2. “Federal Funds Effective Rate”. FRED. https://fred.stlouisfed.org/series/FEDFUNDS

3. “Wages and Employment Do Not Have To Decline To Bring Down Inflation”. Schweitzer, Khattar. Center for American Progress. September, 2022. https://www.americanprogress.org/article/wages-and-employment-do-not-have-to-decline-to-bring-down-inflation/

4. “FACT SHEET: The Inflation Reduction Act Supports Workers and Families”. The White House. August, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/19/fact-sheet-the-inflation-reduction-act-supports-workers-and-families/ 

5. “FACT SHEET: CHIPS and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, and Counter China”. The White House. August, 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/ 

6. “12-month percentage change, Consumer Price Index, selected categories”. U.S. Bureau of Labor Statistics. https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm