Great Resignation

  Total job openings
  Quits rate

The Great Resignation, also known as the Big Quit,[2][3] is an ongoing economic trend in which employees have voluntarily resigned from their jobs en masse, beginning in early 2021, primarily in the United States. Possible causes include wage stagnation amid rising cost of living, economic freedom provided by COVID-19 stimulus payments, long-lasting job dissatisfaction, and safety concerns of the COVID-19 pandemic. Some economists have described the Great Resignation as akin to a general strike.[4][5][6]

The term was coined by Anthony Klotz, a professor of management at Mays Business School at Texas A&M University, who predicted the mass exodus in May 2021.[7][8][9][10]

Background

In the twenty years preceding February 2021, roughly a year after the beginning of the COVID-19 pandemic, the United States resignation rate never surpassed 2.4% of the total workforce per month.[11] High quit rates indicate worker confidence in the ability to get higher paying jobs, which typically coincides with high economic stability, an abundance of people working,[12] and low unemployment rates.[13][14] Conversely, during periods of high unemployment, resignation rates tend to decrease as hire rates also decrease. For example, during the Great Recession, the U.S. quit rate decreased from 2.0% to 1.3% as the hire rate fell from 3.7% to 2.8%.[11]

Resignation rates in the U.S. during the COVID-19 pandemic initially followed this pattern. In March and April 2020, a record 13.0 and 9.3 million workers (8.6% and 7.2%) were laid off, and the quit rate subsequently fell to a seven-year low of 1.6%.[11] Much of the layoffs and resignations were driven by women, who disproportionately work in industries that were affected most by the lockdowns, like service industries and childcare.[13][15][16]

As the pandemic has continued, however, workers have paradoxically quit their jobs in large numbers. This is despite continued labor shortages and high unemployment.[17][18]

Causes

The COVID-19 pandemic has allowed workers to rethink their careers, work conditions, and long-term goals.[12][19] As many workplaces attempted to bring their employees in-person, workers desired the freedom of remote work due to the COVID-19 pandemic as well as schedule flexibility, which was the primary reason to look for a new job of the majority of those studied by Bankrate in August 2021.[20] Additionally, many workers, particularly in younger cohorts, are seeking to gain a better work–life balance.[21] Millions of people are also suffering disabilities from long COVID, altering their ability or desire to work.[22]

Restaurants and hotels, industries that require in-person interactions, have been hit the hardest by waves of resignations.[23] COVID-19 stimulus payments and rises in unemployment benefits have allowed those who rely on low-wage jobs for survival to stay home, although places where unemployment benefits were rolled back did not see significant job creation as a result.[23][12][24] On the other hand, many workers who are dissatisfied with their jobs report that they cannot resign due to economic barriers, many of these workers being people of color.[25] Sekou Siby, president and CEO of the US nonprofit Restaurant Opportunities Center United, commented, "There's more competition across industries, so workers are feeling more empowered than ever before, but that doesn't mean everyone is able to leave their current jobs."[25]

According to a study conducted by Adobe, the exodus is being driven by Millennials and Generation Z, who are more likely to be dissatisfied with their work. More than half of Gen Z reported planning to seek a new job within the next year.[26] Harvard Business Review found that the cohort between 30 and 45 years old had the greatest increase in resignation rates.[27] Racial minority, low-wage, and frontline workers are also more dissatisfied with their work in the United States, according to the asset management firm Mercer.[28]

An IMF working paper by Carlo Pizzinelli and Ippei Shibata focused on causes of the loss in employment within the US and UK labor markets in comparison to pre-COVID-19 levels.[29] They identified job mismatch (that is, mismatch between the areas where people search for work and where the most vacancies are) as playing a "modest" role, being less significant than in the wake of the global financial crisis. The effect of the pandemic on women, sparking the so-called "She-cession", was deemed as accounting for some 16% of the total US employment shortfall but little to none of the shortfall in the UK. Meanwhile, the authors attribute 35% of the shortfall in both the UK and US to older workers (aged 55–74) withdrawing from the labor force.[29] On the other side, Harvard Business Review reported that resignation rates actually fell for those aged 60–70 years old (in comparison to 2020 rates).[27]

Impacts

United States

In April 2021, as COVID-19 vaccination rates increased, evidence began emerging that the Great Resignation was beginning in the United States. That month, a record 4.0 million Americans quit their jobs.[30][18] In June 2021, approximately 3.9 million American workers quit their jobs.[31] Resignations are consistently the most prevalent in the South, where 2.9% of the workforce voluntarily left their jobs in June, followed by the Midwest (2.8%) and the West (2.6%). The Northeast is the most stable region, with 2.0% of workers quitting in June.[32]

In October 2021, the U.S. Bureau of Labor Statistics reported that food service workers' quit rates rose to 6.8%, which is well above the industry average of 4.1% over the last 20 years and still higher than the industry's quit peaks of 5% in 2006 and 2019.[33] The retail industry had the second highest quit rates at 4.7%.[34] From the start of the pandemic to November 2021, approximately one in five healthcare workers quit their jobs.[35]

According to Microsoft's 2021 Work Trend Index, more than 40% of the global workforce were considering quitting their job in 2021.[36] According to a PricewaterhouseCoopers survey conducted in early August 2021, 65% of employees said they were looking for a new job and 88% of executives said their company was experiencing higher turnover than normal.[37] A Deloitte study published in Fortune magazine in October 2021 found that among Fortune 1000 companies, 73% of CEOs anticipated the work shortage would disrupt their businesses over the next 12 months, 57% believed attracting talent is among their company's biggest challenges, and 35% already expanded benefits to bolster employee retention.[38]

Wage growth has jumped; in December 2021, wage growth reached 4.5%, the highest since June 2001.[39][40] Some employers in the fast food industry, like McDonalds, are providing more benefits, like college scholarships and healthcare benefits, to buy back workers.[41] Public sector jobs have had higher worker retention as compared to private sector jobs, largely due to stronger benefits like paid family leave.[42]

Amidst the Great Resignation, a strike wave known as Striketober began, with over 100,000 American workers participating in or preparing for strike action.[6][43] While discussing Striketober, some economists described the Great Resignation as workers participating in a general strike against poor working conditions and low wages.[6]

Europe

A survey of 5,000 people in Belgium, France, the UK, Germany and the Netherlands by HR company SD Worx found that employees in Germany had the most COVID-19-related resignations, with 6.0% of the workers leaving their jobs. This was followed by the United Kingdom with 4.7%, the Netherlands with 2.9%, and France with 2.3%. Belgium had the least number of resignations with 1.9%.[44]

Some preliminary data show an increase in the number of quits in Italy, starting in the second quarter of 2021. The registered increase was not only in absolute terms, but also in terms of quit rate (computed as quits over employed population) and of quit share (computed as quits over total contract terminations).[45]

China

A similar social protest movement is occurring in China, referred to as tang ping (Chinese: 躺平; lit. 'lying flat'). It started roughly during the same time as the Great Resignation, in April 2021.[46] It is a rejection of societal pressures to overwork, such as in the 996 working hour system. Those who participate in tang ping instead choose to "lie down flat and get over the beatings" via a low-desire, more indifferent attitude towards life.

India

India has witnessed large scale resignations across many sectors of the economy.[47] The information technology sector in particular witnessed massive attrition, with over a million resignations in 2021.[48][49][50][51]

Australia

Australia is seeing an unprecedented number of workers leaving their jobs for better pay and working conditions.[52] In IT, salaries have increased well over 10% in many areas.[53]

See also

References

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