The Great Resignation – Economy – Investopedia
The Great Resignation describes the elevated rate at which U.S. workers have quit their jobs starting in the spring of 2021, amid strong labor demand and low unemployment as vaccinations eased the severity of the COVID-19 pandemic. Anthony Klotz, a professor of business administration at Texas A&M University, coined the term in May 2021, attributing the phenomenon to pent-up demand from workers who deferred decisions to quit earlier in the pandemic.
Though each individual’s reasons for changing jobs or leaving the workforce are tied to personal circumstances, there is no question that the arrival of COVID-19 and related job losses immediately curbed voluntary exits by employees. The quitting rate tracking voluntary separations from employment for reasons other than retirement plunged from a typical 2.3% in February 2020 to 1.6% two months later in the Job Openings and Labor Turnover Survey (JOLTS) by the U.S. Bureau of Labor Statistics (BLS).
Employees often quit jobs after accepting a better one elsewhere, so to a large extent, the drop reflected the decline in hiring for new positions. Others undoubtedly delayed a planned exit, whether to start their own business or for another reason, amid the economic turmoil at the outset of the pandemic.
With the arrival of COVID-19 vaccines and the accompanying economic rebound, hiring has picked up, even as those who delayed quitting for other reasons finally felt comfortable about proceeding.
Some have suggested the quitting rate may also have risen for other reasons tied to the COVID-19 pandemic:
Notably, though, the top reasons given by the workers who quit in a Pew Research Center survey conducted in February 2022 were low pay and a lack of advancement opportunities, suggesting that many left for a better offer.
Harvard economist Jason Furman argued in June 2021 that the elevated rate of people leaving their jobs was in line with the rising number of job openings, suggesting that competition among employers was driving resignations.
A record 4.5 million workers quit jobs for reasons other than retirement in March 2022, representing an increase of 152,000 from February 2022, according to JOLTS data. Job openings of 11.55 million at the end of March 2022 were also the highest on record.
Source: Federal Reserve Bank of St. Louis
The industries with the highest resignation rates in March 2022 were accommodation and food services (6.1%) and retail trade (4.5%). Accommodation and food services was also the industry with the highest job openings rate at 9.9% in March 2022, though that was down from 12.2% three months earlier. Healthcare and social assistance was next with an openings rate of 9%.
Source: Federal Reserve Bank of St. Louis
According to the 2022 Work Trend Index survey by Microsoft Corp. (MSFT), 43% of workers said they were somewhat or extremely likely to consider changing employers in the current year, up from 41% a year earlier. For U.S. Gen Z and millennial workers, the figure stood at 52%, and it rose to 60% for U.S. workers hired during the pandemic.
Another survey conducted in November 2021 found that 23% of U.S. workers planned to quit over the next year. The top reasons cited were the desire for better working conditions, burnout, and the pursuit of higher pay.
Anthony Klotz, a professor of business administration at Texas A&M University who coined the “Great Resignation” term, says companies can retain employees who are burned out by giving them a break and more support. Experts say employers can offer more accommodating work arrangements, including remote work, hybrid work, and flexible schedules. And they can listen to what employees say they want and need instead of making tone-deaf, top-down decisions.
Burnout looks different in different lines of work. A burned-out respiratory therapist or veterinary technician may have experienced a level of trauma at work beyond that risked by a typical office employee. In general, common burnout symptoms include exhaustion, cynicism, and a sense of ineffectiveness. Poor working conditions that include routine exposure to COVID-19, understaffing, insufficient time off, and emotional abuse have contributed to burnout during the pandemic.
The proof is there in the elevated quitting rate tracked by the U.S. Job Openings and Labor Turnover Survey (JOLTS), which matched a series high at 3% in March 2022. But if hiring were to slow, causing unemployment to tick up, then the quitting rate would likely decline accordingly.
U.S. Bureau of Labor Statistics. “Job Openings and Labor Turnover Summary.”
Bloomberg. “How to Quit Your Job in the Great Post-Pandemic Resignation Boom.”
Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis. “Quits: Total Nonfarm (JTSQUR).”
The New Yorker. “Why Are So Many Knowledge Workers Quitting?”
Bloomberg. “Employees Are Quitting Instead of Giving Up Working from Home.”
The American Prospect. “The Great Escape.”
Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis. “Labor Force Participation Rate (CIVPART).”
Pew Research Center. “Majority of Workers Who Quit a Job in 2021 Cite Low Pay, No Opportunities for Advancement, Feeling Disrespected.”
Peterson Institute for International Economics. “US Workers Are Quitting Jobs at Historic Rates, and Many Unemployed Are Not Coming Back Despite Record Job Openings.”
U.S. Bureau of Labor Statistics. “Job Openings and Labor Turnover — March 2022,” Pages 1–2.
U.S. Bureau of Labor Statistics. “Job Openings and Labor Turnover — March 2022,” Page 11.
U.S. Bureau of Labor Statistics. “Job Openings and Labor Turnover — March 2022,” Page 8.
Federal Reserve Economic Data (FRED), Federal Reserve Bank of St. Louis. “Job Openings: Total Nonfarm (JTSJOR).”
Microsoft. “2022 Work Trend Index: Annual Report,” Page 38.
Microsoft. “2022 Work Trend Index: Annual Report,” Page 56.
CareerArc. “23% of Employed Americans Plan to Quit in the Next 12 Months: 23 Key Stats from the Great Resignation + Rehire Survey.”
The Boston Globe. “‘The Great Resignation’ Is Looming: Why People Are Quitting Their Jobs Post-Pandemic.”
TechRepublic. “The Great Resignation of 2021: Are 30% of Workers Really Going to Quit?”
Harvard Business Review. “Don’t Force People to Come Back to the Office Full Time.”
The New Republic. “The Exaggeration of ‘Burnout’ in America.”
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