Job Separation Rate Shows Economic Shifts

Tuesday, July 08, 2014

The unemployment rate receives considerable attention when discussing how the labor market has responded and improved since the Great Recession, but several other indicators shed some light on this issue as well. An Economic Synopses essay examines the components of the job separation rate for additional perspective on the labor market.

The job separations rate consists of two types of separations:

  • Voluntary separations, or quits
  • Involuntary separations, or layoffs and discharges

In the essay, David Wiczer, an economist with the Federal Reserve Bank of St. Louis, explains that these separations show how workers perceive the economy and how firms anticipate their staffing needs. “Workers who quit their jobs likely anticipate finding better work. Layoffs and discharges, on the other hand, bode poorly for the economy, as they demonstrate that firms are paring back staffing faster than can be accomplished simply by slowing hiring.”

Since 2000, the overall number of job separations has been relatively stable; it did not spike even during the Great Recession, the worst period of unemployment in the post-war period.1 Wiczer noted, “Instead, the increases in the unemployment rate were largely driven by the rate at which workers found new jobs. That rate was very slow, as the number of hires plummeted during the Great Recession.”

Job quits have been relatively stable since 2000, accounting for more than half of all job separations until the Great Recession, when they fell drastically in lockstep with the decline in hiring. However, the overall separation rate did not follow the same downward spiral, as layoffs and discharges rose quickly.2 While layoffs and discharges returned to trend level by January 2010, quits have remained depressed at about 15 percent below their prerecession level. Combined, these two paths account for the slight fall in the number of overall separations.

Wiczer noted, “A low level of quits implies that workers do not believe it is easy to find another job, which is consistent with the still-low level of hiring. However, half a decade after the recession, firms are not laying off existing workers. So can the labor market still be ‘bad’?”

Notes and References

1 See the top chart for hires and separations since 2000.

2 See the bottom chart for voluntary and involuntary separations since 2000.

Additional Resources

Posted In Labor  |  Tagged david wiczergreat recessionlabor marketunemployment
Commenting Policy: We encourage comments and discussions on our posts, even those that disagree with conclusions, if they are done in a respectful and courteous manner. All comments posted to our blog go through a moderator, so they won't appear immediately after being submitted. We reserve the right to remove or not publish inappropriate comments. This includes, but is not limited to, comments that are:
  • Vulgar, obscene, profane or otherwise disrespectful or discourteous
  • For commercial use, including spam
  • Threatening, harassing or constituting personal attacks
  • Violating copyright or otherwise infringing on third-party rights
  • Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.
comments powered by Disqus

The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.

Subscribe to
On the Economy

Get notified when new content is available on our On the Economy blog.

Email Alerts  |  RSS

About the Blog

The St. Louis Fed On the Economy blog features relevant commentary, analysis, research and data from our economists and other St. Louis Fed experts.

Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.

Contact Us

For media-related questions, email For all other blog-related questions or comments, email