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More workers are quitting, and that's a good sign

One sign of better economic times is when more people start finding jobs. Another is when they feel confident enough to quit them.

More people quit their jobs in the past three months than were laid off — a sharp reversal after 15 straight months in which layoffs exceeded voluntary departures. The trend suggests the job market is finally thawing.

Some of the quitters are leaving for new jobs. Others have no firm offers. But their newfound confidence about landing work is itself evidence of more hiring and a strengthening economy.

"There is a century's worth of evidence that bears out this view that quits rise and layoffs fall as the job market improves," said Steven Davis, an economist at the University of Chicago.

The government said Tuesday that the number of people quitting rose in April to nearly 2 million. That was the most in more than a year and an increase of nearly 12 percent since January. That compares with 1.75 million people who were laid off in April, the fewest since January 2007, before the recession began.

During the depths of the recession, workers were hesitant to quit — and not only because jobs were scarce. Even if they found a new job, some feared that accepting it would leave them vulnerable to a layoff. At many companies, layoffs follow a simple formula: Last hired, first fired.

Many clung to their jobs out of fear, said David Adams, vice president of training at Adecco, a national staffing agency.

About 25 percent of companies' top performers said they plan to leave their current job within a year, according to a survey published in the May edition of the Harvard Business Review. By contrast, in 2006, just 10 percent planned to leave their jobs within a year. The survey questioned 20,000 workers who were identified by their employers as "high potential."

Companies retained those workers during the recession but heaped more work on them, said Jean Martin, the study's co-author and executive director of the Corporate Executive Board's Corporate Leadership Council in Washington. At the same time, employers cut back on awards and bonuses, she said.

Now, top performers at some companies are heading for the exits as hiring picks up. It means companies will feel more pressure to retain them.

"These rising stars know what they're worth," Martin said. "They feel somewhat neglected."

More workers are quitting, and that's a good sign 06/09/10 [Last modified: Wednesday, June 9, 2010 8:42pm]
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