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Arizona among tops in nation for workers quitting jobs

Spencer Platt
Getty Images

By Howard Fischer
Capitol Media Services
PHOENIX -- A higher percentage of Arizonans quit their jobs in March than almost anywhere in the nation.
Data collected by WalletHub find the "quit rate'' hit 4.2 percent. 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 isn't a one-time thing. The same data put the quit rate for the past year at 3.3 percent, the third highest figure in the nation.
It's 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 percent once seasonal adjustments are made.
At the same time, the state said the jobless rate in Arizona dropped to 3.2 percent. Doug Walls, the agency's labor market information director, said that's the lowest its been since the government began reporting unemployment data this way in 1976.
All that is good news -- for some.
"For workers, this can reflect increased opportunities in the state,'' said George Hammond, director of the Economic and Business Research Center at the Eller College of Management at Arizona State University.
"It can also offer workers the chance to increase wages by changing jobs,'' he told Capitol Media Services. "It could also reflect poor job quality.''
But there's a flip side.
"For firms, this can mean increased costs as they experience high rates of turnover,'' Hammond said.
That also shows up in data that 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. And the lack of availability of other -- and potentially better -- jobs during the recession was not lost on Arizona workers: The quite rate at that time dropped below 1.6.
Danny Seiden, executive director of the Arizona Chamber of Commerce and Industry, said he doesn't see the rising numbers as necessarily a bad thing.
"Increasing quit rates are often a sign of confidence in the economy,'' he said. "People tend not to quit their jobs when they don't think they can go out and get another one.''
And Seiden said it's not surprising that Arizona is near the top of the list of folks who quit 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.
"People have left that industry,'' Seiden said, a sector of the economy that traditionally has low wages. But he said that the data also shows that hiring is going on in other industries.
"So I don't think it's an issue of people leaving and not going back to work,'' Seiden said.
But that shift in employment, in turn, is having ripple effects, leaving restaurant owners struggling to find workers.
"They offered things like signing bonuses to get people through the door,'' he said.
"They're paying higher than they ever had,'' Seiden said. "So I do think employers have kind of raised the stakes for getting employees into the door.''
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 just $17.55 an hour. That figure is now $20.81, an increase of nearly 19 percent in just that time period.
Seiden said this isn't 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 even offering fringe benefits like free college.
All this, however, comes at a cost.
"The more employers have to pay, the more goods are going to have to cost,'' Seiden said.
"One of the unfortunate things you see when there's a tight labor market, that's a contributing factor to inflation,'' he said. That's most immediately visible to consumers at the gasoline pump and what they're paying at the grocery store.
In fact, the consumer price index for the Phoenix area -- the only measurement for Arizona -- is up 11percent year over year, compared with 8.3 percent nationally.
All that, in turn, raises the question of whether the unemployment rate in Arizona is too low, with too many employers with job openings chasing too few folks out of work with offers of big raises that, in turn, fuels inflation.
Hammond cites the fact that while the quit rate in Arizona has been going up, the "hire'' rate -- the percentage of employed workers added to a company's payroll -- has remained relatively flat.
"This reflect increased churn in the labor market as firms seeking to rapidly ramp up product meets workers re-evaluating career opportunities,'' he said, quitting one job to take another at a different firm, a different occupation or an entirely different industry.
"We are in unique times,'' said Walls, with a sharp increase in employer needs for workers.
The positive sign, he said, 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.
"It's taking some time for these individuals to find the type of employment that they're looking for,'' Walls said. "With unemployment being as low as it is, they have likely more choices and can be pickier with the jobs they're deciding to accept.''
Seiden said he will never say that the state's jobless rate is too low. But he acknowledged there's another side to that question.
"Is the economy too hot right now and does it need to slow down a little bit to help lower inflation?'' he asked. And that, in turn, leads to 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 "resilient'' and will weather all of this.
It starts, he said, with the fact that there is a much more diversified job base.
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.
"And those are high-paying jobs,'' Seiden said. "We're doing really well.''
Thursday's unemployment report showed that private sector companies added 9,600 workers between March and April, a growth rate of 0.4 percent. Year over year, the figure is 4.2 percent
On Twitter: @azcapmedia