A higher percentage of Arizonans quit their jobs in March than almost anywhere in the nation.
Federal data collected by WalletHub finds the βquit rateββ hit 4.2%. That means for every 1,000 people employed, 42 of them decided, in essence, they can do better elsewhere.
Only Florida posted a higher figure.
And this isnβt a one-time thing. The same data put the Arizona quit rate for the past year at 3.3%, the third highest figure in the nation.
Itβs not just the financial advice firm that finds employed Arizonans are increasingly looking elsewhere.
On Thursday, the Arizona Commerce Authority put the quit rate for March at an even higher 4.5% once seasonal adjustments are made.
At the same time, the state said the jobless rate in Arizona dropped to 3.2%. Thatβs the lowest itβs been since the government began reporting unemployment data this way in 1976, said Doug Walls, the agencyβs labor market information director.
All that is good news β for some.
βFor workers, this can reflect increased opportunities in the state,ββ said George Hammond, director of the Economic and Business Research Center at the Eller College of Management at the University of Arizona.
βIt can also offer workers the chance to increase wages by changing jobs,ββ he said. βIt could also reflect poor job quality.ββ
But thereβs a flip side.
βFor firms, this can mean increased costs as they experience high rates of turnover,ββ Hammond said.
That also shows up in data, which shows the number of job openings is now above 240,000.
Compare that to 2009 during the recession when there were just 40,000 slots for which employers were looking for workers. The lack of availability of other and potentially better jobs during the recession was not lost on Arizona workers: The quit rate at that time dropped below 1.6.
The rising numbers arenβt necessarily a bad thing, said Danny Seiden, executive director of the Arizona Chamber of Commerce and Industry.
βIncreasing quit rates are often a sign of confidence in the economy,ββ he said. βPeople tend not to quit their jobs when they donβt think they can go out and get another one.ββ
Seiden said itβs not surprising that Arizona is near the top of the list of folks quitting their jobs.
He noted that Arizona shares one thing with some of the other states with high quit rates: A high reliance on jobs in tourism and the hospitality industry, including hotels and restaurants.
βPeople have left that industry,ββ a sector of the economy that traditionally has low wages, Seiden said. But he said the data also shows hiring is going on in other industries.
βSo I donβt think itβs an issue of people leaving and not going back to work.β
The shift in employment, in turn, is having ripple effects, however, leaving restaurant owners struggling to find workers.
βThey offered things like signing bonuses to get people through the door,ββ Seiden said. βTheyβre paying higher than they ever had. So I do think employers have kind of raised the stakes for getting employees into the door.ββ
That is putting it mildly.
In March 2020, the Bureau of Labor Statistics said Arizona employers in the leisure and hospitality industry were paying an average of $17.55 an hour. That figure is now $20.81, an increase of nearly 19% in just that time period.
Seiden said this isnβt limited to the service industry. Consider, he said, the fact that companies like Amazon and Starbucks are not just paying higher than minimum wage but offering fringe benefits like free college.
All this, however, comes at a cost.
βThe more employers have to pay, the more goods are going to have to cost,ββ Seiden said.
βOne of the unfortunate things you see when thereβs a tight labor market, thatβs a contributing factor to inflation,ββ he said. Thatβs most immediately visible to consumers at the gasoline pump and what theyβre paying at the grocery store.
In fact, the consumer price index for the Phoenix area β the only measurement for Arizona β is up 11% year over year, compared with 8.3% nationally.
All that raises the question of whether the unemployment rate in Arizona is too low, with too many employers with job openings chasing too few unemployed folks with offers of big raises that, in turn, fuel inflation.
Hammond cites the fact that while the quit rate in Arizona has been going up, the βhireββ rate β the percentage of employed workers added to a companyβs payroll β has remained relatively flat.
βThis reflects increased churn in the labor market as firms seeking to rapidly ramp up product meets workers re-evaluating career opportunities,ββ quitting one job to take another at a different firm, a different occupation or an entirely different industry, he said.
βWe are in unique times,ββ said Walls, noting the sharp increase in employer needs for workers.
He said the positive sign is there continues to be an increase in the Arizona labor force, the number of people working or looking for work. But putting those people into the available jobs is another matter.
βItβs taking some time for these individuals to find the type of employment that theyβre looking for,ββ Walls said. βWith unemployment being as low as it is, they have likely more choices and can be pickier with the jobs theyβre deciding to accept.ββ
Seiden said he will never say the stateβs jobless rate is too low. But he acknowledged thereβs another side to that question.
βIs the economy too hot right now and does it need to slow down a little bit to help lower inflation?ββ he asked. There are also questions of whether the Federal Reserve Board will take action nationally to curb that, to the point that cooling the economy could lead to a recession.
Still, Seiden said he believes that, whatever action the Fed takes, the Arizona economy is βresilientββ and will weather all of this.
There is a much more diversified job base now, he said.
In 2006, before the recession, one job out of every 11 was in the construction industry. That made Arizona particularly at risk when the bottom dropped out of the housing market.
Now there are more jobs in the manufacturing sector than those in construction.
βAnd those are high-paying jobs,ββ Seiden said. βWeβre doing really well.ββ
Thursdayβs unemployment report showed that private sector companies added 9,600 workers between March and April, a growth rate of 0.4%. Year over year, the figure is 4.2%
