The Great Resignation: How we became a nation of quitters
The Quits Rate surges to an all-time record
Originally posted on my Power and Markets Substack, please feel free to share and subscribe to my newsletter to get these articles in your inbox!
“May you live in interesting times.”
- Supposedly an ancient Chinese curse, but who knows
If you want a raise, quit your job. That adage rings truer today more than ever. I’ve been meaning to write a piece on the Quits Rate, and data released last week catapulted this to the front of the line. So here we are. The Quits Rate measures the number of employees voluntarily quitting their jobs. Simple enough.
In September alone, a record 3% of America’s workforce turned in their notices and walked out the door. That’s 4.4 million employees choosing to shift careers in just one month! At the same time, unfilled jobs remain stubbornly high at 10.4 million open positions fueling continued wage gains. 1 What is going on?! Why the sudden behavioral shift in the employee-employer dynamic? I’ll offer some theories because it is indeed a very weird time we are going through.
Let’s start first with the obvious: COVID. This has been the most socially disruptive event of our lifetimes. It simply cannot be overstated. Human societies undergo these abrupt and punctuated changes in response to dramatic experiences. For us, it happened to be a global pandemic.
The policy decisions in reaction to COVID have absolutely boiled over with unintended social consequences. The initial lockdowns spiked unemployment from 3.5% in February 2020 to 14.8% by April. 2
The shock was incredible. Tens of millions of Americans were laid off; many more were sent home to hunker down in isolation and attempt to replicate their workspaces on the fly. Empty streets foreboded the apocalypse. Social vitality was sapped anywhere you went. Everyone did what they had to as the economic engine slammed to a stop.
As a result, work-life will never be the same. As humans, we adapted to our new conditions. Remote work was once reserved strictly for tech jobs with rare exceptions, or supplemented your day job with “homework” you brought from the office. With COVID, many became remote workers out of necessity. What was once vehemently resisted by employers and managers was foisted upon them without a moment’s notice. This paradigm shift in work is still underway.
The pandemic proved work-at-home was possible because it was made essential first. It completely shattered the workplace mold and gave options to millions of employees. Suddenly, geographic boundaries didn’t constrain work. The same tasks could be accomplished anywhere in the world with an internet connection. Office employees were finally liberated from cubicles.
While millions were adjusting to makeshift workspaces on their dining room tables, they gained new perspective. Many had to keep their kids home as schools also closed. Suddenly, families were reunited as work and school were both conducted on a 15 inch laptop screen. Parents began reassessing and realigning their expectations for family life as well as their professional careers. Non-parents looked at is as an era of new opportunities. Many made the move to move on having not looked back.
COVID disrupted the view people had to the traditional workplace. It proved both employers and employees alternative arrangements were practical. As a result, many workers began insisting upon it. You could now apply for a job 6 states away and not move from family. Workers began quitting.
“Our biggest competitors right now, quite frankly, are Amazon and Target. Teachers leave us. They go to Amazon. They make $24 an hour. They get a $4,000 signing bonus. Target, they make $17 an hour with a high school diploma. So those are our biggest competitors. Retail is our biggest competitor right now.”
- Zakiyyah Boone, CEO of Wonderspring Early Education
If you want a raise, quit your job. That’s happening in spades. Shortages for employees are being aggravated as more people feel empowered and desire flexibility. Employers are finding it difficult to recruit and keep talent as remote work opens up the job market nationwide.
Another aspect of COVID has been the number of people dropping out of the labor force. Over half of Americans 55+ are now retired, up +2.2% from 2019. 3 Many older workers are finding they prefer leisure, and some may be discouraged to return to work due COVID concerns themselves. Earlier than expected retirements are becoming a norm.
Employers are having to grapple with these new dynamics. The wildcard they are turning to is robotics and automation. None of this is new, but the trend may be dramatically accelerating as wage inflation climbs, work stoppages occur with the resurgence of unions, and turnover is making it difficult to maintain operations. Restaurant owners polled said over half are looking to implement automation to fill labor gaps in the next 2–3 years. 4 It seems like the entire labor market is being reallocated from top to bottom.
These times are very interesting indeed that we are living through. If you want a raise, now is probably the best time to get one. You can always ask your boss, or who knows..try quitting!
Originally published at https://powerandmarkets.substack.com on November 15, 2021.
