CNNMoney (02/11/14) Christopher Matthews
Amid declining participation in the job market, the unemployment rate has become a less useful tool to gauge the health of the labor market, as people are dropping out of the labor market altogether rather than behaving like traditionally unemployed people do. The U.S. Federal Reserve is expected to turn to other measurements—namely, the quits rate—to guide monetary policy.
Federal Reserve Chairman Janet Yellen has previously said she’ll focus on the percentage of workers who are quitting each month. Yellen said last year that, “a pickup in the quit rate, which also remains at a low level, would signal that workers perceive that their chances to be rehired are good—in other words that labor demand has strengthened.” The rate remained roughly steady at 1.7% of nonfarm jobs in the latest report, but it has been slowly increasing since the depths of the recession. Though the quit rate still remains below average, observers expect this metric to improve along with the labor market, and Janet Yellen to use it as a benchmark to guide her decisions on monetary policy.
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