The Big Quit. The Great Resignation. The Big Reshuffle.These are a few of the terms used to describe the sudden spike in the number of workers quitting during the COVID-19 pandemic. Clearly, something's afoot. However, has the recent press coverage been overstated? As we consider the public discourse centered on labor force dynamics, let us look at data from Federal Reserve Bank of St. Louis.
In March 2020, the World Health Organization (WHO) declared a global pandemic. One month later, in April 2020, monthly resignation dipped to a decade low of 1.9 million. That figure has since more than doubled, passing 4.3 million in March 2022. In May 2021, Professor Anthony Klotz of Texas A&M characterized the yearlong monthly increase in employee departures as the "Great Resignation." But if we look at the past two decades of monthly job quits on the graph below, we see more of a long-term trend versus a sudden spike.
From 2004 to 2008, monthly quits trended upwards from 2.0 million to about 2.8 million. During the next two years of the financial-market-induced recession, monthly quits dropped to 1.5 million. For the next decade, from that 2010 trough until the 2020 pandemic declaration, monthly quits again trended upward to 3.2 million before dipping to 1.9 million. Since recovering to the pre-pandemic 3.2 million figure, the monthly tally has climbed further to 4.1 million during the past five quarters.
In other words, the pattern has been that monthly resignations climb higher during stronger economic periods, plummet during challenging economic times and then return to the upward trend during recoveries. So, those are the numbers. The interpretation can be a function of timeframe as well as perspective.
It makes sense that during a recession, companies fire more and hire fewer. It should come as no surprise that employees are less confident about switching jobs during that time. Then the opposite manifests during economic expansions. Now, the narrative behind the Great Resignation cites the following for the exodus of employees:
- lifestyle reassessment
- changing career goals
- low pay
- lack of advancement opportunities
- workplace abuse or disregard
- childcare challenges
- poor health insurance or little paid time-off benefits
Any one of these or any combinations of these are plausible for a variety of individuals. From January 2021 and extending to February 2022, there were 57 million resignations. During that same period, there were 89 million hires. People are not simply disengaging from the labor market. Rather, they are switching employers for better pay, better lifestyle, or better alignment with their values. As a result, some prefer the term Great Renegotiation over the Great Resignation. In terms of lifestyle, an important dynamic at play is whether workers can work remotely or must be on premises. In our related post, we will delve into that.
It takes an average of one to two years before an employee becomes fully productive. Given the onboarding and training cycle as well as the cost to recruit and the downtime of open positions, it is important that companies screen well for the best chance at stable employment relationships. Beginning in the 1980s, companies’ stock prices were rewarded for downsizing, outsourcing, and restructuring. As a result, the occurrence of workers staying with one company for 25+ years until earning their gold watch and pension became more infrequent. At William K. McLaughlin and Associates, we recognize that fit matters and we take the time to match employees to employers accordingly. We have been helping match talented individuals to successful companies in unique ways for over 50 years.
“I just wanted to reach out on my first day and thank you so much for all your help over the last few weeks. You are the job whisperer! You made what should have been a very stressful time into an absolute breeze with your support, guidance, and counsel. I can't thank you enough for all your help, both in landing me at Nantero way back in 2008 and then helping me find a place at GTC now. John, you are the best! “
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Jan 12, 2023