The rate at which Americans are quitting their jobs fell to pre-pandemic levels in July, the latest sign that the so-called Great Resignation is waning and the job market is cooling.
A little more than 3.5 million employed Americans — or about 2.3 percent — quit their jobs last month, according to the Job Openings and Labor Turnover Survey (JOLTS) released Tuesday by the Labor Department’s Bureau of Labor Statistics.
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This is the lowest the quits rate has been since January 2021, and it falls in line with pre-pandemic rates, which hovered around 2.3 to 2.4 percent in the years leading up to the outbreak of COVID-19.
Job openings also fell to 8.8 million in July, down from 9.2 million in June, marking its lowest level since March 2021, according to the Labor Department’s data.
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Julia Pollak, chief economist with online recruiting company ZipRecruiter, said Tuesday that the new data largely bridges the recent gap between federal data and the number of online job postings, which had already fallen to pre-pandemic levels.
“Today’s JOLTS report partially resolves the conundrum and confirms what we’ve been seeing in online job postings: The labor market is largely back to pre-pandemic conditions,” Pollak said in a statement.
She pointed to the “large drop” in job openings in July to just 26 percent above pre-pandemic levels and the dip in the quits rate “all the way back to its pre-pandemic rate.”
“Both declines point to cooling labor market conditions, which will come as a relief to many employers, but bring back many of the old challenges that have characterized job search for decades,” she added.
The falling quits rate appears to be the latest signal that the “Great Resignation” — in which Americans left their jobs at record-high rates in the wake of the pandemic — is waning.
The quits rate peaked at 3 percent in late 2021 and early 2022, around the same time that job openings hit a high of 12 million.
The vast majority of Americans who quit their jobs do so before taking new ones, often with better compensation, working conditions or career opportunities. Record levels of job openings prompted millions of workers to seek new gigs and forced companies to boost wages and other perks for applicants.
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However, Elise Gould, a senior economist at the Economic Policy Institute, suggested that Tuesday’s numbers are still consistent with a good labor market for workers.
“Even as hires have softened, hiring remains above the quits rate in every sector,” Gould said in a statement. “The great reshuffling isn’t what it was two years ago, but it continues as workers look and find better job opportunities.”
While Pollak suggested that the shift was indicative of a cooling market, she similarly noted that the current conditions still favor job seekers and workers to an extent.
“While it might take more time, more applications, and stronger job interview performances to land a job than it did in 2021 and 2022, there are still plenty of jobs going unfilled,” Pollak said.
The latest job opening numbers come as the Federal Reserve is set to consider yet another interest rate hike next month amid its efforts to rein in inflation.
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After reaching a record-high of 9.1 percent last June, annual inflation has eased over the past year, coming in at 3.2 percent last month, according to the Labor Department’s consumer price index.
As the Fed attempts to get inflation down to its 2 percent target, signs of a cooling job market could weigh against an additional rate hike in September.
Federal Reserve Chairman Jerome Powell noted Friday at a gathering of central bankers in Jackson Hole, Wyo., that the softening of labor market conditions would be a key factor in further bringing down inflation.
While Powell acknowledged that the labor market has continued to rebalance over the last year, he also warned that “evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response.”