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It’s being called the Great Resignation. Quits are at their highest rate in 20 years and no one seems to understand why. One thing is for sure: the labour market has gone weird. People are leaving their jobs without having a new one lined up, pushing up unemployment rates even as wages rise and companies complain they can’t find enough workers. That’s led to lots of speculation that the pandemic has changed people’s priorities — and hence the US labour market — forever.
In the urgency of the moment, it’s easy to overstate the significance of what’s going on; every major recession leaves scars. But some things don’t change, and that includes the most basic requirement for keeping employees happy and on the job: Good management.
Government policymakers can run around trying to fix the situation by mandating higher wages, more benefits, or even by expanding the power of unions. None of that will change the simple fact that bad managers are a handicap no company can afford anymore. Since the 1980s, the trend has been for Americans to stick with the same job longer. That changed last year. It’s not just that people are quitting more often, which isn’t such a surprise if there are lots of better jobs available. Quits and hires normally move in tandem, or with a small lag, and those job-to job-changes are definitely part of the quit mix now. But what’s rattling the market is the disconnect: quits are up and hiring is down at a time when employers are desperately trying to attract workers.
A big educational divergence in this trend is also causing more problems for some industries than others. Data from the Current Population Survey shows the share of workers who quit or left the labour force in the last year and who still aren’t working. High school dropouts in this category rose to 2.8% from 2.1% two years ago. More educated workers haven’t become more likely to quit.
That tracks with the fact that the retail and food-service sector has been hardest hit. These jobs have always had high turnover, but we’ve seen a large uptick in quits in the last few months. This has left us trying to figure out why. The most likely reason is that the labour shortage has increased wages, especially at the lower-paid jobs. Changing jobs often is the only way to access that better pay, and there are many options in this labour market. But higher pay doesn’t explain the number of people who’ve quit their jobs without taking another.
—Bloomberg