The Great Resignation Coming to an End
Posted on December 12, 2022
Job Openings Finally Fall Below 11 Million For First Time Since December 2021
According to the US Bureau of Labor and Statistics, over 47 million people quit their job in the United States in 2021 alone. This introduced us to one of the most unprecedented times in our recent history, where more than two vacant jobs were available for every person who was unemployed. While economists and business owners argue over the many possible causes of the Great Resignation, there are many more questions that still need to be answered. Could it have been avoided? What will the long-lasting impact be on our economy? And perhaps most important, is it finally coming to an end?
As if the COVID-19 pandemic and the aftermath left in its wake were not enough, our nation then faced a crisis unlike any it had seen in history. People quit their jobs left and right in search of new opportunities, leaving some business owners who were already challenged by COVID now struggling to keep enough staff to allow their doors to remain open.
History has shown that when large numbers of employees feel empowered enough to resign from their jobs, a period of higher inflation rates generally follows, but it is usually subtle. Some experts have calculated the Great Resignation has caused an increase to the rate of inflation of more than 1.1%.
This sudden shift in power from employers to employees has several long-lasting effects. Perhaps most noteworthy is the fact that employers are put in a position where they must be competitive and take into consideration things that employees find most important in a workplace.
Increased benefits, remote or hybrid work schedules, and better pay are at the top of the list of workers’ demands. More than 37% of employees reported the primary reason they quit their job was because of low pay, followed closely by feeling disrespected and then lack of advancement opportunities. Other reasons included a lack of schedule flexibility, not enough benefits, and too many hours.
Amongst the employees who resigned in search of something better, 94% said it was very easy to find their next opportunity. The majority of these people also reported that their new job has better pay and better benefits.
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Searching for a Cause
In an effort to find the root cause of the Great Resignation, many experts have been quick to point to the global COVID-19 pandemic. While it is true that the pandemic did play a large role in what seemed like a sudden shift in the labor market, statistics show that it is simply the high point of what has been a decades-long trend.
Over the past 21 years, our nation has endured three economic recessions each followed immediately by a period of great expansion and growth. In 2001 the market crashed when many internet start-ups that were grossly overvalued suddenly collapsed. In 2008 we saw the housing bubble burst, which caused banks to fail and the stock market to plummet. And most recently, the COVID-19 pandemic caused worldwide economic issues, leaving many businesses closed for good.
However, after each of these historic downfalls, there is a remarkable period of growth. This growth brings improved economic conditions and a steady decline in unemployment rates. But at the end of each of these periods, we end up back to a place of “normalcy,” with the unemployment rate right around 5.6-5.8%.
Having recognized the trend of this cycle, we can see (as illustrated in this chart) the effects of each recession on the unemployment rate, followed by a steady decline back to normal. What is perhaps most remarkable about the Great Resignation is the short period of time it took to recover from one of the worst recessions in history.
The number of job openings had never exceeded 8 million in the US until 2021. January of 2022 through August of 2022 saw more than 11 million open positions in each month, but August marked the first significant downturn with 10 million job openings. When taken in context and with the realization that the cause of that high number of open positions was due to the COVID-19 crisis winding down and businesses reopening, it is a little bit easier to swallow.
While we may be through the worst of this historic period of time, that doesn’t mean it should be forgotten. There are many lessons to be learned in every significant economic trend. As an employee, it is important to recognize those periods of time when it makes the most sense to jump toward a new opportunity, especially one with better pay and more benefits. For employers, it is critical to remain competitive and always pay close attention to your employee’s overall satisfaction with their job.