What’s driving the great resignation?

The pandemic saw 6 million people drop out of the workforce. What happened to them?

Illustration courtesy of iStock

Work by the Numbers is a deep-dive into the biggest trends, research and surveys in the world of work and real estate.

For many Americans, a job is not just a source of income, it’s an identity, and leaving your position is a major decision. That’s why a term like “great resignation” is so evocative. Millions of people are choosing to change their lives. The reasons are nuanced, but there’s one major through line: After a major disruption, people are adjusting to their new normal. 

The COVID-19 pandemic fundamentally changed how employees experience and think about their life and work, shifting the relationship between employees and employers. This shift isn’t just about compensation. Many workers are now looking for greater flexibility. Others are switching industries or leaving the workforce altogether. More than 4.4 million Americans left their jobs in September alone, according to the Bureau of Labor Statistics (BLS), a trend that’s only been picking up since early 2021. 

While some reasons for leaving are impossible for employers to prevent, understanding others may help keep employees on board and attract new ones as priorities realign.

What is the great resignation?

The great resignation is a term coined in early 2021 to describe the increasing number of people leaving their jobs during the pandemic. From approximately March 2021 to November 2021, the quit rate in the United States—which is the number of people who voluntarily left their job during the month as a percentage of total employment, as measured by the BLS—has trended higher, reaching 3 percent in September, the highest on record since it began this measurement in 2000. Before March 2021, this rate never exceeded 2.4 percent. 

Some states are seeing higher quit rates than others, with Hawaii leading at 7.1 percent in September, followed by Montana at 4.8 percent, and Nevada at 4.5 percent. At the same time, Texas saw the highest numbers of people quitting at 69,000, followed by California at 40,000, and Colorado at 25,000. 

Quit rates are at or near record highs across most industries
Business services

There’s a common misconception that the great resignation is confined to hospitality, retail, and healthcare. While restaurants and hotels came in at a 6.6 percent quit rate in September, retail at 4.4 percent, and healthcare at 2.9 percent, several other industries are seeing record, or near record, quit rates. Professional and business services were also high at 3.3 percent, and manufacturing was at 2.7 percent, up significantly from a previous high of 1.8 percent before the pandemic.

Why are people leaving their jobs?

The decision to leave a job, especially when one doesn’t have another one lined up, is personal. But generally, reasons for quitting can be broken into three main categories. The first is seeking better compensation. The second is leaving for better flexibility and remote work options. And the third is looking to change their professions or even leave the workforce altogether. 

In search of better wages

According to an August survey of 1,007 U.S.-based employees by consulting firm PwC, better pay was the number one reason employees said they left their job, and better benefits came in second. 

Wages are not keeping up with inflation. On average, wages grew by 3.3 percent in the third quarter of 2021, while inflation was 5.4 percent over the same period, according to the U.S. Department of Commerce. During that same time period, job switchers saw their wages increase by an average of 6.6 percent, outpacing those who remained in their jobs. 

Demanding greater flexibility

Many workers are leaving their jobs because of a lack of flexibility or remote work. According to PwC, flexibility came in fourth as a top reason people are leaving, especially among women.

The pandemic made caring for family members, including children, significantly more complicated and costly, leaving parents in a bind. Much of these burdens fell especially hard on working mothers

Schools closures or quarantines left parents with no one to care for their children during the workweek. According to a recent survey from Seramount, nearly one third of all working mothers have scaled back their work or left their jobs entirely to care for their children. Workforce participation by women has been on the decline for over a decade, starting with the 2008 financial crisis, but the pandemic accelerated this trend—with participation now at a 30-year low.

For many parents, this means they need jobs that afford them the flexibility to stay home and care for their children. For those who work in jobs that don’t allow remote options, they’re left with few other choices but to leave their job.

Reassessing priorities

During the early days of the pandemic, people spent a great deal of time isolated at home, thinking about their life and priorities. At the same time, Americans grew their savings by $4 trillion during the pandemic due to stimulus checks, a rising stock market, and less spending, according to a study from Oxford Economics. While these gains weren’t equal, with 70 percent of these savings gains going to the wealthiest 20 percent, they seem to have given workers across the board some leeway to explore new careers or even retire. According to the Pew Research Center, as of the third quarter, 50.3 percent of U.S. adults 55 and older said they had retired from the workforce. That’s compared to 48.1 percent in the same survey before the pandemic, in 2019. 

Independent work is also surging. According to data from MBO Partners, a company that conducted a long-running study of gig workers, the number of people earning an income from independent work in the U.S. has risen to an unprecedented 51 million in 2021, a 34 percent increase compared to 2020. This could help explain a good portion of the 6 million people who have dropped out of the American workforce, according to the BLS, which often overlooks independent workers.  

The new normal

According to the U.S. Department of Labor, the week ending November 20 saw unemployment claims in the U.S. drop to 199,000, the lowest level since November 1969. This suggests that people might be finding situations that work for them. Whether they left to find better wages, to care for their families, or to pursue other interests or retirement, there doesn’t seem to be an easy way to keep them from resigning.

Employers should always strive to listen to their employees, offer competitive compensation, and prioritize flexibility that allows people to work when and where they need to. Make reasonable adjustments that accommodate changing worker needs when possible. But beyond that, it appears that the pandemic has inspired many to find a better situation than the one they found themselves in when the world shut down. No one wants employees to be unhappy with their job. We can’t say for sure where the labor market is headed, but if people are happier with what they do for a living, that’s something worth celebrating. 

Bradley Little is a writer and video producer based in New York City.

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