Government workers are quitting their jobs at a historic rate and it's great news for your paycheck

Despite a weaker than expected jobs report and JOLTS number, the labour market in the US appears to be fairly tight.

According to Torsten Sløk, chief international economist at Deutsche Bank, the number of people quitting state and local government jobs is near an all-time high.

“The quits rate measures the number of people who resign as a per cent of total employment, and the quits rate for government workers is near its all-time highs, and higher than in 2006,” said Sløk in a note to clients.

Now this is interesting because the general quits rate is supposedly linked with a tight labour market — the thinking being that if someone quits their job it means they feel confident about finding another one.

Government jobs, however, may add another layer. Not only are people thinking that they can find another job, but they think there are higher wages out there.

Government jobs typically have a more stringent wage structure since they are part of the state budget, and given the budget woes of various states, wage increases may not be assured.

So as wage pressures build up in the private sector and lead to pay raises, many government workers may be feeling more secure about leaving a job in the public sector and going after higher wages and a greater possibility of raises in the future.

Based on the Bureau of Labour Statistics Employment Cost Index, the wages and salaries for private sector workers increased by 2.6% in the 12-month period ending in June 2016, while wages and salaries for state and government employees increased by just 1.7% over that same time period. The year before — from June 2014 to June 2015 — wages and salaries increased 2.2% for both private employees and state and local government employees.

Thus, with these workers departing, it would seem that one good explanation for the uptick in public sector quitting is that people are finally noticing the disparity in wage increases between the private and public sector. While this may not directly lead to a bump in private pay, it certainly means people are catching on to the trend.

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