What Is Frictional Unemployment? Voluntary Resignation Causes

Frictional unemployment refers to the process of workers voluntarily leaving their jobs in the short term. Economists consider it to be just one factor among others when it comes to the natural rate of unemployment. The frictionally unemployed will generally become re-entrants to the labor force after taking a willful break from work, supposing there’s a surplus of available jobs.

A high level of frictional unemployment can actually be a positive sign for the economy as a whole. When the economy gets close to full employment, workers feel more comfortable leaving their jobs to seek out other careers. This is largely due to the high number of unfilled vacancies available. Plentiful job opportunities allow people to feel more secure about leaving their current position with the hope a new one will be easy to find.

Frictional unemployment occurs for a litany of different reasons. Here are just five of the most common:

1. 1. Desire for a career change: In the event of low unemployment across the economy, many workers feel far more comfortable seeking out a better job or working conditions. Contrast this with job hunting in a recession when opportunities for new work are scarce. While some people prefer to not leave their current position until they line up another one, others feel comfortable with a short period of frictional unemployment to free them up for their job search.
2. 2. First-time job market entry: After someone acquires new skills in high school or college, there might be a period of time before they put these to work at their first job. This period between education and employment is also a form of frictional unemployment. New entrants to the job market might want to wait until they secure an ideal first position rather than just taking the first offer they get.
3. 3. High unemployment benefits: People might consider the government’s offer of high unemployment payments as an incentive to leave a current position and start a new job search; however, unemployment benefits generally apply only to laid-off or fired workers rather than those who leave voluntarily (as in the case of frictional unemployment). When a high proportion of workers become dependent upon unemployment benefits, it can negatively impact employers and the economy as a whole.
4. 4. Personal reasons: You might leave your current job for various personal reasons. Perhaps you want to take time off to be a full-time parent with the knowledge you’ll return to the labor force eventually. Maybe you need to care for an ailing relative. For that matter, looking for new employment can feel like a part-time job in and of itself, so you might want to leave your current position before starting to search for a new one.
5. 5. Relocation: Suppose you hope to move from one state to another and your current employer refuses to allow a remote work option. In this case, you might choose to leave your current job due to the fact you want to relocate. Once you arrive in your new location, you might find it easier to find a new employer in the area.

Unemployment can be voluntary; however, most forms are not. Consider these types of unemployment:

1. 1. Cyclical unemployment: The business cycle of economic growth inevitably leads to contraction or recession at one point or another. Cyclical unemployment refers to the joblessness following one of these contractions. The US Federal Reserve will often work hand in hand with Congress to pursue a monetary and fiscal policy to turn the tide back toward growth—and greater employment—as soon as possible.
2. 2. Frictional unemployment: In a solid labor market, frictional unemployment can be a sign of healthy economic activity rather than a financial crisis. This type of joblessness refers to when people quit their jobs prior to starting new ones. These sorts of fluctuations in the labor market prove opportunities are plentiful rather than scarce.
3. 3. Institutional unemployment: Employees might find themselves jobless for institutional factors. For example, an unscrupulous company might fire long-time employees to hire new workers simply to avoid paying higher wages to those with seniority. This leads to qualified people returning to the labor market against their will.
4. 4. Seasonal unemployment: Some job openings will only last for a month or two by their very nature. For instance, think of how many Halloween pumpkin patches and temporary costume stores show up around the holiday only to vanish shortly thereafter. Job seekers who find employment in a venue like this will need to find new jobs again in the short term.
5. 5. Structural unemployment: The frictional unemployment rate has little bearing on the structural unemployment rate. The latter refers to when technological changes or economic competition renders large swaths of industry irrelevant, leading a number of people in the labor force to lose jobs through no fault of their own.

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