What is the quits rate?

The quits rate, published monthly as part of the Job Openings and Labor Turnover Survey (JOLTS), measures the number of workers who voluntarily leave their jobs as a percentage of total employment. Unlike layoffs, which are involuntary, quits represent a positive labor market signal: workers typically quit only when they are confident they can find a better opportunity elsewhere.

The quits rate is one of the Fed's preferred labor market indicators because it captures the demand side of the employment picture from the worker's perspective. When the quits rate is elevated, it signals that workers have abundant alternatives, which gives them bargaining power to negotiate higher wages. Former Fed Chair Janet Yellen specifically cited the quits rate as one of her "dashboard" labor indicators, and the current Fed leadership continues to reference it regularly.

During the "Great Resignation" of 2021-2022, the quits rate surged to 3.0%, well above the pre-pandemic peak of 2.4%. This reflected a labor market where job openings far exceeded available workers, giving employees unprecedented leverage. The elevated quits rate correlated with accelerating wage growth, particularly in low-wage sectors where workers were most willing to switch employers for better pay.

The subsequent normalization of the quits rate from 3.0% back toward 2.0-2.2% was central to the Fed's soft-landing narrative. A declining quits rate means workers are becoming less confident about finding new opportunities, which reduces wage pressure without requiring mass layoffs. For analysts, the quits rate provides a forward-looking signal for wage growth: changes in quits typically lead changes in average hourly earnings by 2-3 quarters, making it valuable for inflation forecasting.