The U.S. labor market has stayed resilient amid tight financial conditions spurred by elevated interest rates, as the unemployment rate hit 3.9 percent, a relatively low level.
At the same time, the quit rate in January—the voluntary leaving of a job by workers and an indicator of whether people are willing to leave or stay at their job—was 2.1 percent, according to the U.S. Bureau of Labor Statistics.
Delaware, South Carolina and Alaska were among the states seeing the highest resignation rates in the country.
Delaware recorded a 3 percent mark, with South Carolina at 2.9 percent followed by Alaska, Kentucky and Utah at 2.8 percent for January, according to an analysis by WalletHub.
Massachusetts and Michigan, at 1.5 percent, and New York at 1.6 percent had the lowest quit rates in the country during the same month.
The overall trend in quit rates—in a labor market where there are several more openings than companies are able to fill—dictates that workers have flexibility when it comes to looking for jobs.
Emerging from the COVID-19 pandemic, workers were emboldened as employers were rapidly looking to hire.
"This led to increased competition among employers for a reduced workforce, giving employees leverage to secure jobs with better compensation or other advantages over their current roles," Victoria Prowse, professor of economics at Purdue University, said in a statement for the WalletHub study.
The resignation rates have declined over the last year, but still remain elevated. Part of the reason quit rates are high in some states may be due to heightened retirement levels.
"Some older workers felt they could quit because their 401Ks grew rapidly in 2020-2021, they could self-select into unemployment benefits which were made more generous, and they thought they could afford it," Peter F. Orazem, professor of economics emeritus at Iowa University, told WalletHub. "Rising asset values (primarily housing) also made them wealthier."
Read more: What Is a 401(k)?
But with elevated costs of living, some of those workers may have been changing their minds.
"This is particularly true for people who left at ages 45-60 for whom career earnings are peaking. Workers are paid for their firm-specific skills, and long-tenured workers who left their jobs may find that they cannot get comparable salaries at a new job," Orazem said.
Quit rates may also be elevated due to Americans changing the way they think about work.
"We have moved from 'living to work' to 'working to live' to the current state of 'living only if work matters,'" Matt Fuss, associate professor of management and human resource management at Geneva College in Western Pennsylvania, told WalletHub. "Younger people today must feel an emotional connection to their work and have been programmed to believe that every job must have a specific measurable effect on making the world a better place."
Fuss believes that these changes in philosophy could become entrenched, especially in a labor market that favors workers.
"I believe this shift in perspective, as well as radical change in the underlying philosophy of what work is, will cause the labor force issues to persist long-term," he said. "The very reason people work and the motivating factors that drive them have been altered. I fear this shift is only going to get worse and is something employers will be dealing with for years to come."
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
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