By Karen Sternheimer
You have probably heard that many people have been voluntarily leaving their jobs in 2021 and 2022, often called “the great resignation.” Much has been made about people deciding that they prefer to work from home and maybe even change where home is, sometimes communities relocating to lower-cost, slower paced during the pandemic. Perhaps people have decided that their work wasn’t fulfilling and they are looking for a permanent change, having been “awakened” by the sudden change thanks to the pandemic.
There is an almost romantic story being told about people “finding themselves” as those looking to hire wring their hands about the lack of labor supply. The data tell another story. As Forbes reported in January 2022:
Fully two-thirds of the folks leaving jobs this past August weren’t actually ‘quitting.’ They were returning. One million were ‘normal’ retirements, an additional 1.5 million opted for early retirement. That’s a whole different story.
The vast majority of younger people aren’t leaving the labor force, just looking for a different job. As many work opportunities become remote, taking a job in another state no longer requires a major life change. Even if one does work that cannot be done remotely, this worker shuffle means more job openings locally too. And people at the lower end of the labor market still have difficulty finding full time work, as the New York Times reported:
How could this be when the country is in the midst of a labor shortage in which employers are struggling to fill jobs? Because executives at many companies have decided that part-time work is too important to abandon just because the labor market is temporarily tight. Part-time work allows companies to hold down labor costs in two crucial ways. First, companies can reduce their benefit costs because part-time workers often do not receive health care and retirement benefits. Second, companies can change staffing levels quickly, to meet demand on a given day or week, rather than having workers sit idle during slower periods.
The story is more complicated than people just quitting their jobs. Most are looking for more or better work. But the graph below from the Bureau of Labor Statistics tells yet another story. Looking at job separations from 2011 to 2021, we see the big story is the more than 21 million people who lost their jobs in March and April 2020. The blue area represents “quits,” or voluntarily leaving a job (although not necessarily leaving the labor force altogether).
While quits declined during the early months of the pandemic, they had been hovering around 3.5 million a month for years before the pandemic while began and resumed at these levels in the fall of 2020. And they topped 4 million per month between July and November 2021 , it is likely that some of these were an evening out of those who might have been holding onto a job during economic uncertainty and felt more confident to move on.
Source: https://www.bls.gov/opub/ted/2022/number-of-quits-at-all-time-high-in-november-2021.htm
The wave of retirement among older workers has not been equal. As Pew Research Center found, new retirees are more likely to be white, born in the US, and have earned a bachelor’s degree or higher. These are also people more likely to own their own homes and thus benefit from the rise in housing costs, as well as own stocks and benefit from stock market gains.
As our population ages, and more baby boomers begin to reach retirement age, we might expect to see more people leaving the labor force. However, as Pew reported, older adults are expected to remain in the labor force longer in the future:
BLS [Bureau of Labor Statistics] projects large increases in labor force participation among older adults from 2020 to 2030, with nearly 40% of 65- to 69-year-olds being in the labor force by 2030, up from 33% in 2020.
The “great resignation” seems more likely to be the “great catch-up,” as people who might have normally changed jobs or retired delayed doing so during the pandemic. It will be interesting to see how work and the labor market continue to change going forward, as we all adjust to a new normal in many social settings.
