Monday, June 27

The Great Resignation

By: Marvi Ali

During the onset of the pandemic, employers were furloughing and firing workers rapidly, in an effort to downsize. Unemployment peaked in April 2019 at 14.8%. There was great uncertainty as to whether workers would find any jobs, let alone better jobs. However, the U.S. Bureau of Labor Statistics recently reported that, in August, 4.3 million Americans had quit their jobs, setting a new record but following the trend of rising quit rates from previous months. Economists have increasingly begun to recognize this new phenomenon as “The Great Resignation,” which is a term coined by Anthony Klotz, an organizational psychologist at Texas A&M University, in 2019. He predicted a mass, voluntary exodus from the workforce, and this is exactly what is happening. We are witnessing a major shift in the traditional power dynamic from employers to employees. Throughout all sectors and at all skill levels, millions of people are quitting their jobs in search of more appealing opportunities.

Why are more and more Americans leaving the safety nets of their current jobs? Closer examination suggests that this shift is likely due to economic benefits and a desire for a better standard of living. Right now, there are a record number of job openings. In August, the number of job openings declined by 659,000 to 10.4 million, which, relatively, is still extremely high. According to Lawrence Katz, people have delayed a lot of consumption due to the pandemic. Now, there’s huge demand. We’re also seeing a rise in inflation, which, in combination with a tight labor market, will force employers to raise wages if they want to keep their workers. Additionally, after finding a better work-life balance during the pandemic, workers are unwilling to endure difficult hours and insufficient compensation.

Ultimately, this shift represents a turning point in American economic history. Some economists suggest that the Great Resignation is indicative of a deeper-rooted societal shift. The pandemic and the rise of remote-work have illuminated new possibilities. UC Berkeley economist Ulrike Malmendier has suggested that there’s an existential element to the Great Resignation – the pandemic and the normalization of remote work has permanently altered the way we understand the boundaries and balance between the home and office.