Job Separations Rising in Idaho Which Is Good News for Economy

The unemployment rate is one of the most widely referenced indicators of economic health. Separations – people leaving jobs – can have a large impact on the rate. Some may view this as a negative indicator of economic strength – more separations mean a weaker job market – but that is not always the case as it depends on why people leave their jobs. Recently, data suggests separations are increasing and approaching the same levels during the recession, but this is actually a good thing.

Workers leave their jobs for many reasons. Sometimes separations are involuntary , such as being fired for performance issues or misconduct, or there may be a worker layoff for economic reasons. Increasingly it seems Idaho is experiencing voluntary separations — workers leaving jobs to take new and presumably better, positions. These separations are a positive sign for Idaho’s economy because they indicate the job market is healthy enough for workers to have choices again; the economy has moved past the point where a worker feels compelled to take whatever job is available, and people feel comfortable exploring options in the job market.

Evidence for this comes from Job to Job Flows, a data source tabulated by the U.S. Census Bureau. This data tracks the movement of workers between jobs and unemployment on a quarterly basis. When a separation occurs, the Census Bureau tabulates it and categorizes the worker as moving either to unemployment or to a new job. Likewise, every time someone in Idaho is hired, the Census Bureau notes whether that person was previously unemployed or if they were hired away from a different job.

Separations in Idaho are increasing. The high point was the second quarter (April through June) of 2007, with about 78,000 separations. This period of high separations continued for several quarters, coinciding with the rising unemployment rate during the recession. Separations started decreasing thereafter, and tapered off at about 56,000 in the second quarter of 2009, which, coincidentally was when the state unemployment rate reached its high point. Now, however, separations are on the rise and reached almost 70,000 in the most recent quarters of data.

This rising number of separations is a good sign for Idaho’s economy, because it appears many of these workers are leaving their jobs to take different positions. When the job market was poor during the recession, most separated workers claimed unemployment insurance benefits. In fact, from 2008 to 2009, about 36,000 workers went from jobs to persistent unemployment every quarter. Now separated workers are increasingly moving to new jobs.

This is good news for multiple reasons. First, it indicates the job market is healthy enough for workers to explore choices. Of the workers who moved to a new job following separation, 70 percent moved to a new job immediately, which indicates the job seeker had a new position lined up before leaving the old job. The remaining 30 percent found new positions after a short search of less than a month. This is good news for everybody in the labor market. Not only are choices available for workers seeking new options; workers who lose their jobs involuntarily are finding new positions. During the recession, 60 percent of workers who lost their jobs were still unemployed after a full quarter of searching. Today, only 46 percent of separated workers face the same scenario.

Increased job separations can seem like a worst case scenario for the economy, but in the right context this can actually be good news, which the data shows to be the current situation for Idaho. Total separations are increasing quickly, but the affected workers are taking advantage of a strong labor market to move to new, more preferable positions, and often for higher pay. For those workers who find themselves separated involuntarily, unemployment has increasingly become a short-term problem.

Sam.Wolkenhauer@labor.idaho.gov, regional economist
(208) 457-8789 ext 4451