The tight market, where workers have more leverage to move around and employers are doing everything they can to staff up, is already impacting the holiday shopping season, ZipRecruiter chief economist Julia Pollak tells CNBC Make It.
And there's reason to believe quitting will continue well into 2022.
High turnover is primarily concentrated in essential frontline industries where jobs can't be done remotely. Some of September's biggest losses come from the already strained leisure and hospitality, retail, manufacturing and health services industries. People left their jobs fastest in the Southern region of the country.
With the pace of quitters, Pollak says, "employers are basically having to replace their entire staff in just a couple of months. It's really quite dramatic."
Quits increased the most in arts, entertainment and recreation (like people who staff live events); other services (which ranges from auto workers to hairstylists to laundry workers); and local and state government jobs.
So far, roughly 34.4 million people have quit their jobs this year, with more than 24 million doing so since April. By comparison, 36.3 million people quit their job in all of 2020.
The Labor Department reported 10.4 million job openings in September, consistent with previous months, with the largest increases in health care and social assistance; state and local government, excluding education; wholesale trade; and information roles.
But high job openings paired with high quits rates is leading to what Emsi Burning Glass senior economist Ron Hetrick refers to as a game of musical chairs. Employers in strained industries are fighting for the same workers who are quitting at record rates.
As of September, there were seven unemployed workers for every 10 job openings — a record low — giving people the upper hand in being choosy with their next role. Of course, those are nationwide averages. Hetrick says some markets, especially in the South and West, could have even fewer available workers for every job opening.
The largest gaps in openings versus available workers remain in health care, transportation and warehousing jobs that require in-person work and where the risk of contracting Covid-19 remain high, Pollak says.
The U.S. labor market added 531,000 jobs in October, an improvement from a sluggish September, led by roles in leisure and hospitality; professional and business services; manufacturing; and transportation and warehousing.
Businesses are doing everything they can to staff up for the holiday shopping season, including offering flashy hiring bonuses, retirement benefits, tuition assistance and other perks not usually offered to lower-wage workers, Pollak says.
Still, it may not be enough to get people into the workforce to keep pace with skyrocketing consumer demand. Already, airlines are having to cut flights and manufacturers are signaling shipping delays due in part to staffing shortages.
The high consumer demand paired with labor shortages is creating a "traffic jam" that will continue into the holiday season, Pollak says. Workers willing to take on seasonal, often in-person work, could benefit from higher wages and attractive benefits: "That huge additional demand is putting enormous strain on employers to expand their capacity in a constrained labor market," Pollak says.
The current period of historic turnover can be "an exciting moment for job seekers who are benefiting from employers offering hiring incentives and reducing their requirements" or time to hire, Pollak says.
People who change jobs are seeing faster wage growth than people who stay. And hiring incentives, along with a pandemic-low unemployment rate, could encourage people not in the labor force to re-enter while the market is hot.
But with the quits rate 30% higher today than it was in February 2020, Hetrick doesn't expect record turnover to cool before the end of the year. He has his eye on the labor force participation rate, or a measure of how many people are working or actively looking for work, which has held steady for months at 61.6%, down 1.7 percentage points from pre-pandemic levels.
There are 5 million fewer people in the labor market today than there were prior to the pandemic. Hetrick expects more will re-enter the labor force as their personal savings rates, buoyed by stimulus funds, runs down, possibly as early as the spring of 2022.
"You're seeing an economy where leaders have rushed to adapt by raising wages," Pollak says, "and followers slower to adapt, due to regulation or institutional arrangements, will be under enormous pressure to make changes to catch up. As they play catch-up, you'll see more demand for workers, and exciting outside opportunities for workers who can quit."