The raise-interest-rates crew has lately been getting excited over a slight rise in the quit rate, the percentage of workers who voluntarily leave their jobs. The claim is that the labor market is now getting so tight that workers are able to get wage gains, which will be passed along in higher prices, which will soon mean accelerating inflation.
It's a bit hard to see much of a case here. While the quit rate is above the troughs seen in 2009-2010 it is still lower than at any point in the 2001 recession and aftermath. Wages by most measures are pretty much rising at the same pace as they have been over the last three years, and inflation seems to be slowing rather than rising. But hey, if you want to slow the economy and throw people out of work, you can always find something.
Anyhow, there are two sides to any quit decision. On the one hand, there is an unhappy worker. On the other hand there is an employer who has made this worker unhappy. This is worth thinking about.
The business press has been full of stories of employers complaining that they can't find qualified workers. I and others have ridiculed these claims, since the obvious way to get qualified workers is to offer higher wages. This does not seem to be happening on any large scale, suggesting that employers really are not having trouble finding workers.
But perhaps there is more to our ridicule than we imagined. Maybe employers really don't understand that if they offered higher wages they would get more workers applying for jobs. After all, no one gives you a test in basic economics to become a boss. If that is the case, we would expect the failure to raise wages would lead to more unhappy workers and more quits. This would be true even if the labor market is weak.
So maybe the answer to the riddle of a higher than expected quit rate is a change in behavior among employers rather than a change in the labor force. It's at least as good as the other theories out there.
Note: Hyphens added, thanks Fred.