Job turnover is a good thing - except it's not happening much

churn.jpgWhen the employment market is normal, you see lots of people quitting their jobs for something that's located in another city or pays more money - whatever. You also have people who are let go for reasons not related to the company's financial condition. Typically, these folks are replaced in a comings-and-goings process known as "churn." Economists normally don't pay much attention to churn because it doesn't add or subtract from the workplace totals. But the ongoing recovery has been marked by a lack of churn - that is fewer workers are quitting and fewer are being hired. As explained by WSJ's Ben Casselman, it's a reminder that the monthly jobs report by the government (which has been delayed due to the shutdown) does not tell the whole picture about jobs.

The unemployed don't care whether the jobs they're applying for are new positions or were vacated by other workers. In fact, they may have a better chance at landing pre-existing jobs: Economic research suggests companies tend to be pickier when filling new positions, which tend to be more discretionary. When fewer people quit their jobs, there are fewer opportunities for the unemployed to come in behind them. "Nobody's leaving for a better job," said Jason Faberman, an economist at the Federal Reserve Bank of Chicago. "These guys aren't moving on to better jobs, which means their positions aren't opening up for the unemployed."


Churn acts like a kind of grease in the economy's gears, helping workers move to jobs that are a better fit for their skills and helping to shift workers away from poor-performing companies and toward better ones. Recessions slow that process, making the economy as a whole less productive. "People are getting stuck" at less productive companies, said Lisa Kahn, a Yale University economist. "That very likely has consequences even after the recovery."

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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