Every month, the Bureau of Labour Statistics publishes its Job Openings & Labour Turnover Survey, or JOLTS report.
“The two most important series in the report are the hiring rate and the quits rate,” Deutsche Bank’s Joe LaVorgna notes. “Both are leading indicators of wage costs.”
In theory, when workers are more confident about their job prospects they’re more likely to quit. And an economy that offers better job prospects probably offers higher pay.
In other words, you could argue that the pace of quits and the pace of wage growth are related.
“In the chart below, we show the latter compared to the employment cost index (ECI). When people voluntarily quit their job, it typically presages an increase in the ECI. At present, the quits rate is 2.0%, matching its high for the cycle. If the quits rate continues to grind higher, we should see more evidence that the ECI is trending upward, as well.”
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