Tightness in the labor market is supporting job switching.

The latest U.S. “quit rate” was a record high 2.9% as 4.3 million Americans voluntarily left their jobs in August. Quits remain concentrated in the COVID-19 exposed sectors of Leisure and Hospitality, and Retail Trade, although most sectors have higher quit rates than before the pandemic.

Wage gains for job switchers are likely driving this trend. Overall wage growth, as calculated by the Atlanta Federal Reserve, was 4.2% in September (its highest level since 4Q07), while job switchers saw gains of 5.4% compared to job stayers’ 3.5%.

It’s very difficult to find workers at the moment, given current tightness in the labor market. The National Federation of Independent Business (NFIB) survey showed “hard to find” workers hitting a record level in October, and the latest JOLTS report showed 10.4 million job openings. That’s over 2 million higher than the number of unemployed as of August. While the latest report was lower than the 11.1 million job openings in July, it’s the second highest level in the history of the report. To put this into perspective, before the pandemic the unemployment rate was 3.5%, and there were 7.0 million job openings, or 1.3 million more than the figure for unemployed persons.

NFIB’s September survey showed that 26% of owners plan to create jobs in the next three months, down 6% but still well above the historical average of 11%. Additionally, a record high 51% of owners reported not being able to fill job openings in September. Attracting quality labor is also a central problem for employers, and 62% of owners reported few or no qualified applicants. Unable to attract talent, employers are being forced to work employees harder: In September, average weekly hours increased to 34.8, or their third highest level in history.

Those workers who are not changing jobs are putting increased pressure on employers, in what some are calling “Striketober”. Cornell University’s Labor Action Tracker reported 26 unique strikes so far this month (as of October 26), passing September’s 21 strikes. Many of these employers have numerous locations on strike. There are also reports that 100,000 unionized workers across multiple different industries could be going on strike in the coming weeks.

The quit rate is yet another indicator of upward pressure on wages within a tight labor market. Further inflationary pressures are possible as companies look to pass through increased costs. Should these materialize, the timeline for interest rate hikes from central banks should continue to receive more attention.