Frustrated employees are voluntarily quitting their jobs at the highest level in almost three years as confidence they will find another stabilizes, even with unemployment at about 9 percent for more than two years.
Almost 2 million Americans quit their jobs in May, a 35 percent rise from the lowest level in January 2010, according to the Department of Labor. An increase in employees switching jobs is a signal of increased confidence in the labor market and the overall economy, according to Scott Brown, chief economist at Raymond James & Associates Inc., a brokerage firm in St. Petersburg, Fla.
"When the economy is rebounding, workers are more likely to quit their jobs to take another," Brown said, commenting after last week's report that the U.S. economy grew less than forecast in the second quarter.
The share of Americans who perceive that jobs are "hard to get" subtracted from the share of those who say opportunities are "plentiful" rose to negative 39 percentage points in July from a low of minus 46 points in November 2009, according to data from the Conference Board, a New York research group.
The 2007-2009 recession and labor market weakness contributed to rising worker frustration, according to a survey conducted by Right Management, the consulting division of staffing agency ManpowerGroup. Eighty-four percent of employees planned to look for a new job in 2011, up from 60 percent the prior year. Only 5 percent intended to remain in their current position, according to Right Management's December survey.
Coming out of a recession, workers' pent-up frustration about their jobs tends to grow, Brown said. As employees' perceptions of the labor market recover, voluntary departures are likely to rise further, assuming the economy continues its modest expansion.
A further increase in employees who leave, as well as consumers' confidence in the labor market "still have a long way to go to reach pre-recession levels," Brown said. "This is a very gradual recovery."
Pent-up demand by job-weary workers is benefiting Manpower's permanent placement business, even as companies remain "pretty hesitant" about new hiring, Chief Executive Officer Jeffrey Joerres said.
Employee "churn" -- or job switching -- is driving some of the permanent placement volume for staffing agencies such as Robert Half International Inc., according to Kelly Flynn, a Boston-based analyst for Credit Suisse Group. New job creation is the other primary source of revenue growth in permanent placement for these companies, she said. "While new hiring is looking pretty sluggish, these companies seem to be benefitting from more churn in the workplace," Flynn said.
Worker frustration alone may not account for all of the increase in permanent staffing revenue, Flynn said. Some companies may be upgrading their workforces and making strategic hires that will drive revenue, while still eliminating other positions, she said.
As more employees switch jobs, this will embolden some of their coworkers to do the same, according to Brown.