The number of people laid off or discharged from their jobs hit a record low in December as employers took unusual measures to maintain workers.
The Labor Department said Tuesday that the number and rate of layoffs and discharges edged down to 1.2 million and 0.8%, respectively, both the lowest in the two decades that records have been kept.
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Additionally, some 4.3 million workers quit their jobs in December, down from a previous record of 4.5 million the month before, equivalent to about 3% of the country’s labor force.
The rate measures the number of people who voluntarily left their job and includes those who left their job for another one. Economists often interpret high rates as a sign of economic health because people who quit generally are confident of their employment prospects.
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“The quits rate ticked down slightly in December, but it ended the year near its all-time high,” said Nick Bunker, Indeed Hiring Lab’s director of research. “Overall, 2021 saw a historic surge in workers voluntarily leaving their jobs as the quits rate reached higher and higher peaks. More and more people left their jobs to find greener pastures as strong demand for workers resulted in a job switching boom. The result was wages growing at a rate the U.S. labor market hasn’t seen in well over a decade.”
Employers spent an average of 4% more on wages and benefits this past year. Despite the major increase, inflation has outpaced those gains, meaning the real wages that workers earn have been trending downward.
The number of job openings remained largely unchanged from the month before, with about 10.9 million openings in December, according to the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics. The sectors that saw the largest increases were accommodation and food services, information, and nondurable goods manufacturing.
The U.S. Chamber of Commerce pleaded with the Biden administration and Congress to address the worker shortages after the report was released on Tuesday.
“We have 4.6 million more open jobs than we have people looking for work. We can’t get inflation under control, unclog our supply chains, or fully grow our economy unless we fill these open jobs,” said Chamber President Suzanne Clark. “Addressing the worker shortage crisis needs to be a top priority for the Administration and Congress.”
The report comes on the heels of a worse-than-expected December jobs report. The economy added just 199,000 new jobs in November, below forecasts, although the unemployment rate dipped below 4% for the first time since the pandemic began.
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Additionally, inflation has surged. Consumer prices are now running at 7% for the 12 months ending in December, the fastest pace since 1982. Because of the higher prices, the Federal Reserve is planning several interest rate hikes this year.
