Various news sources reported that in August 2021, a record 3% of the US workforce (4.3 million workers) quit their jobs.
The pandemic has led to the worst U.S. recession in history, and millions of people are still out of jobs. Yet employers are now concerned about acute labor shortages. Food and retail industries had the most prevalent decline in workers, with a total of 892,000 workers in the food service and accommodation industries, 721,000 retail workers and 534,000 in health care and social assistance leaving their jobs in the month of August. People have been quitting their jobs more frequently when most of their work is in-person or relatively low-paying, according to Nick Bunker, the director of economic research at the Indeed Hiring Lab.
This trend has been noticeable all over Long Island, with “Help Wanted” signs posted in the windows of numerous businesses in need. The Strathmore Bagels in East Setauket is now forced to close on Mondays due to a lack of workers as just one example of the many chains and local businesses that have to close early due to staffing problems. This is amounting to what Business Insider termed a “hiring crisis.” But why are people choosing not to work?
Many possible answers center around the pandemic. In August, concerns about the Delta variant were high. Workers were concerned about health risks, and because of the emergence of this variant, many school reopenings were disrupted, making it difficult for parents to be able to leave the house again.
Workers are normally not leaving for the pay – workers who voluntarily leave their jobs are generally ineligible for unemployment benefits. Some exceptions are made for workers who have good cause, yet people typically can’t rely on unemployment during a career transition. Exceptions to the rule would be if workers left a job due to unsafe work conditions or “constructive discharge” (if an employer virtually forces an employee to quit). Those situations are decided by the state, which administers unemployment, on a case-by-case basis. During the COVID-19 pandemic, Congress allowed people to qualify for temporary federal unemployment benefits if they quit work for childcare responsibilities, yet those benefits expired nationally on Labor Day, and the cutoff in unemployment benefits has done little to push people back to work.
Regardless, not all of the pandemic-related causes for the “Great Resignation” are so obvious. In recent months, more people are reporting that the pandemic has changed their mindsets in a way that has caused them to value their time more. With workers rethinking how they want to live their lives after the pandemic, they are leaving their jobs in search of more money, more flexibility and more happiness.
Remote work, an effect of the pandemic, has allowed people to reflect on where they find happiness. “We have changed. Work has changed. The way we think about time and space has changed,” says Tsedal Neeley, a professor at Harvard Business School and author of the book Remote Work Revolution: Succeeding From Anywhere. Though people do need to pay bills, they believe their work should now be able to accommodate the type of life they want to lead.
The New York Times noted that for the time being, power in the labor market has swung toward workers. There is truth in this statement: there has been an increase in average hourly earnings, especially for the lowest-paid workers. The percentage of job-to-job moves, where workers leave their job to find a better fit for them but stay in the labor force, has also increased, demonstrating this shift.
Moving forward into September, employment failed to increase. Speaking to the New York Times, Diane Swonk, chief economist for the accounting firm Grant Thornton, said, “Employment is slowing when it should be picking up because we’re still on the course set by the virus.” In the month of September, leisure and hospitality businesses added fewer than 100,000 jobs for the second month in a row.
Fewer people are in the labor force, so hiring challenges won’t be quickly rectified. The reasons for quitting still lie mainly with workers’ demand for better working conditions. These departures could create lasting change, but the changes won’t be completely uniform: some companies might give in to more workers’ demands for continued flexibility, like remote work, and some companies may improve conditions or raise wages.
The post-pandemic hurry back to work that was predicted by economists has yet to occur, and many people are slow to return to the labor force, if they come back at all. Many more businesses are hiring than before the Great Resignation, leading to increased competition for workers. In the meantime, those seeking jobs are enjoying “a rare moment of leverage” according to Ben Casselman of the New York Times — a seemingly new marker of this strange time period we are all living through.