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Recent news has been filled with talk of The Great Resignation – but what exactly is it and how is it altering the business climate?
According to the U.S. Bureau of Labor Statistics, a record-breaking 4 million Americans quit their jobs in April 2021. And then something really odd happened. In July, another 4 million left their job. In August, 4.3 million quit – another record. September – yet another 4 million or so. That’s almost 3 per cent of the workforce quitting every month. And the US is not alone.
In the UK, a large number of industries are severely short of workers. A recent survey by the recruitment firm Randstad UK found that 69 per cent of workers are planning to switch jobs in the next few months, compared to the 11 per cent who normally switch each year. And only 16 per cent of workers were worried about trying to get a new job.
Clearly, something is going on. But it’s not that clear exactly what – probably because the Great Resignation is actually a nexus of a number of different trends, all coming out of the response to the pandemic.
One of the most obvious causes of the epidemic of quitting is that many workers have realised that putting up with poor pay, anti-social hours, and abusive customers is not worth any amount of money. In fact, the sectors with the highest quit rate are notorious for the growing rudeness of their customers – food and hospitality, and retail.
In August, 6.8 per cent of workers in the food service sector and 4.7 per cent of retail workers quit their jobs. Perhaps not surprising when these same workers also report growing workloads and increased incidence of customer rudeness. Airlines in the US reported that, by June 2021, the number of unruly passengers had already doubled the previous all-time record for rudeness.
The government support given to workers during the pandemic may have made it possible for them to reconsider whether being grabbed and spat on by customers day in and day out was really worth minimum wage and have decided to do better.
But this is only a part of the story. Because the other major group of workers hitting the bricks in droves are white collar workers and mid-career employees between 30 and 45 years old. Resignation rates are high among employees who work in fields that saw big increases in demand due to the pandemic, such as healthcare, leading to increased workloads and burnout.
The pandemic forced many of these people to temporarily slow down their lives, and many of them liked what they saw. No commuting, spending time with their children, cooking more – many of those who could work from home found that there was more to life than the office, or even work. In fact, according to a survey by the Federal Reserve Bank of New York, the share of Americans who say they plan to work beyond the age of 62 has fallen to its lowest since the survey started in 2014. Soaring stock and IRA values have also helped convince many to retire early.
What does this mean for employers?
One thing the Great Resignation may mean is that it will harder to take employees for granted and to get by with paying peanuts. Already, wages in traditionally low-paying fields are going up, as desperate employers compete for scarce employees. This is particularly pronounced in the UK, where Brexit has made it very difficult to recruit from overseas.
However, the other big take home may be that employers need to focus more on retention. It is expensive to recruit, and trying to keep it cheap by stinting on salaries and perks can easily backfire in this environment by forcing employers to spend more money on hiring. Research by Oxford Economics found that it takes new professional workers 28 weeks to reach optimum productivity – at a cost of £25,200 per employee.
For lower-wage workers, quitting may be prompted by the desire to earn more. In the UK, we can see this care workers quit their jobs for the higher pay, but not necessarily better work, of Amazon and supermarkets.
For white collar workers, flexibility, such as the ability to work from home or remotely long-term may be more valuable than a higher salary. Employers need to consider what will best help them retain their specific employees.
Others argue that the basic terms of employment are undergoing a ‘Great Reset”’ as work is no longer the centre of workers identity. In fact, the share of Americans who say they plan to work beyond the age of 62 has fallen to 52.1 percent – the lowest number since the Federal Reserve Bank of New York started asking the question, in 2014. Whether or not this continues will depend on a lot of factors, but for employers, it may mean they will have to adjust their thinking in order to hang on to more experienced workers – perhaps offering the option of fewer hours as workers age.
As for the longer-term effects of this great shuffling, it is too early to tell. Pay levels may calm down, or the worker shortage may continue indefinitely. Some have argued that the high levels of quitting are really part of a newfound sense of optimism by workers, a feeling of “I can do better,” that may also drive innovation and growth. If so, the Great Resignation, may yet turn out to be the next great awakening.
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