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The quits rate measures the percentage of workers voluntarily leaving their jobs, signaling confidence in the labor market, while the underemployment rate captures individuals working fewer hours than desired or in jobs below their skill level, reflecting hidden slack in employment. Analyzing the relationship between these two indicators reveals insights into labor market health, wage pressures, and workforce satisfaction. Explore deeper to understand how these metrics impact economic policy and workforce dynamics.
Why it is important
Understanding the difference between quits rate and underemployment rate is crucial for accurately assessing labor market health; the quits rate indicates worker confidence in finding better jobs, while underemployment rate reflects the extent of insufficient job utilization and economic inefficiency. The quits rate rises during economic expansions, signaling worker optimism, whereas a high underemployment rate suggests lingering economic weaknesses despite headline unemployment figures. Policymakers and economists rely on these metrics to tailor targeted interventions that address workforce satisfaction and labor resource allocation effectively.
Comparison Table
| Metric | Description | Significance | Typical Range (US, %) | Implication |
|---|---|---|---|---|
| Quits Rate | Percentage of workers voluntarily leaving jobs | Indicates worker confidence and labor market strength | 1.5% - 3.0% | High quits rate signals strong economy and job opportunities |
| Underemployment Rate | Percentage of workers working less than desired or in lower-skilled jobs | Reflects labor market slack and job quality issues | 5% - 10% | High underemployment signals weak labor demand or skill mismatch |
Which is better?
The quits rate is a key economic indicator reflecting worker confidence and labor market strength, showing the percentage of employees voluntarily leaving jobs, which signals availability of better opportunities. The underemployment rate measures workers employed below their skill level or working part-time involuntarily, highlighting hidden labor market slack and underutilized workforce capacity. Both rates offer critical insights, but the quits rate more directly captures job market fluidity, while underemployment provides a fuller picture of labor under-utilization and economic distress.
Connection
The quits rate, indicating the share of workers voluntarily leaving their jobs, often rises when the economy is strong and labor demand is high, signaling worker confidence and better job opportunities. Underemployment rate, measuring workers employed below their skill level or desired hours, tends to decline as quits increase, reflecting improved labor market conditions and stronger job matches. A rising quits rate coupled with a falling underemployment rate suggests a robust economy with increased job mobility and reduced labor underutilization.
Key Terms
Labor Force
The underemployment rate measures workers employed below their skill or hour capacity, while the quits rate indicates voluntary job separations within the labor force, serving as a key indicator of worker confidence and labor market fluidity. A rising quits rate often reflects a stronger labor market and greater job mobility, contrasting with underemployment, which signals labor market slack and underutilization of workforce talent. Explore further insights into how these metrics impact labor force dynamics and economic growth.
Job Vacancy
The underemployment rate measures the percentage of workers employed below their skill level or part-time involuntarily, while the quits rate tracks the proportion of employees voluntarily leaving their jobs, reflecting labor market confidence. Job vacancy rates provide critical insights into labor demand, often rising when underemployment declines and quits increase, signaling robust employment opportunities and worker mobility. Explore how fluctuations in underemployment and quits rates correlate with job vacancies to understand ongoing labor market dynamics.
Turnover
The underemployment rate measures the percentage of workers employed part-time or below their skill level, highlighting hidden slack in the labor market, while the quits rate reflects voluntary job separations indicating worker confidence and labor market fluidity. High quits rates often signal strong labor demand and employee mobility, whereas elevated underemployment points to underutilized workforce potential and economic inefficiencies. Explore more insights on labor market dynamics and turnover trends to understand workforce health comprehensively.
Source and External Links
Underemployment Following the Great Recession and the COVID ... - The underemployment rate measures the percentage of employed people who work part-time but prefer full-time work, closely tracking the unemployment rate and influenced significantly by industry-specific factors such as leisure, hospitality, and retail sectors.
The Employment Situation - June 2025 - Bureau of Labor Statistics - The document reports detailed data on the unemployment rate, which remains steady around 4.0 to 4.2 percent, but does not explicitly define or provide current figures for underemployment rate.
Room for Progress in College Graduates' Transition to the Labor Market - Underemployment among recent college graduates is significant, with 35% working in jobs below their qualification level, highlighting challenges in achieving full economic utilization of skills after graduation.