Canonical theories of a frictional labor market conceptualize separations as job destruction and vacancies as job creation. This paper shows that workers exiting the labor force hence vacating their positions is an empirically important source of both separations and vacancies. This vacating channel, however, is absent in standard models that treat vacancies as isomorphic to recruiting efforts. I document facts on vacancy dynamics that point to an alternative view of vacancies as “vacant jobs,” which embody sunk investment into physical or organizational capital. I develop a model that incorporates the vacating channel and discipline the model by matching properties of labor market flows. It brings novel insights into the business cycle theory of unemployment: Procyclical employment-to-nonparticipation quits cause job-finding fluctuations through the vacating channel, accounting for about one-third of unemployment fluctuations. Three historical episodes of labor shortages over the past century are consistent with the model, where massive labor force outflows led to skyrocketing vacancies due to the vacating channel, prompting a reevaluation of the lump of labor fallacy. The model also has important policy implications for changing interest rates: While job creation as an investment activity is responsive to the real interest rate, the vacating channel is not. This sheds new light on the possibility of a “soft landing”—raising interest rates without causing high unemployment—during the “Great Resignation,” a period with elevated vacated vacancies.