What the ‘Great Resignation’ Means for the U.S. Economy

By Veronica Carrion
ABA Data Bank

A historic 19 million Americans—amounting to roughly 12 percent of the civilian labor force—quit their jobs between April and the end of August, and many more are looking to make the jump. Nearly half of America’s workers (48 percent) are actively job searching or watching for opportunities, according to Gallup, up from 46 percent in 2019. The trend isn’t just prevalent in one industry; workers in all job categories, from customer service roles to highly professional positions, indicate they were looking to make a switch.

Who is quitting?

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Resignations are apparent in all worker age groups. While younger workers have historically had the highest turnover rates; since 2020, mid-career employees have seen the greatest increase in resignations. The Harvard Business Review found that this age group saw an average increase of more than 20 percent in resignations over the year. Many factors could have attributed to this jump in mid-career employee resignations, including the shift to remote work leading to demand for more experienced workers. There is also a chance that uncertainty caused by the pandemic led many to hold off a previously desired job transition until summer 2021.

Over the summer, resignation rates were higher among employees who worked in fields subject to extreme increases in stress due to the pandemic. The sectors with the highest quit rates, according to the Bureau of Labor Statistics, were retail and hospitality, healthcare and technology.

However, research indicates other industries may start to see an uptick in employee turnover as well. A recent survey by ResumeBuilder found that large shares of business and finance (24 percent), education (15 percent), and construction (15 percent) employees are starting to prepare to resign from their current positions by the end of year.

Why are workers quitting?

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The pandemic allowed workers to reevaluate their career decisions and values. For those looking for new jobs, flexible work arrangements (56 percent), higher pay (53 percent) and job security (47 percent) are among the top priorities for workers.

Job satisfaction for hospitality workers is at an all-time low, while burnout has led to record high resignations of nurses. Many customer-facing industries faced heavy layoffs at the beginning of the pandemic, which increased the workloads of the remaining staff.

Workers also faced higher virus exposure risks and frustrated customers. More than a third of food and hotel workers who plan to quit within the next three months cited dealing with difficult customers as the main reason for leaving.

Following last summer’s lockdowns, many families reduced spending, increased savings and paid down debt, which provided them with safety nets to quit without having a new job lined up first. Record high job openings and increased wages offered by employers to attract new talent incentivized many workers to leave jobs and jump into a candidate-friendly market. This was especially true for low-wage workers seeking opportunities for career advancement.

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Remote work also remains an important factor for workers. According to a survey by FlexJobs, 65 percent of survey respondents who have been teleworking since spring 2020 said they want to continue working remotely full-time after the pandemic. Thirty-three percent prefer a hybrid work arrangement, while only 2 percent say they want to return to the office full-time. Fifty-eight percent of workers said they would “absolutely” look for a new job if they cannot continue remote work.

As a result of all these trends, employers continue to struggle with a worker shortage despite the record of job openings at the end of August. The lack of workers and consistent turnover could continue to slow reopening of the economy, contribute to rising prices, and extend supply chain constraints. However, the current labor market has allowed millions of workers to reduce burnout and find better pay with improved work-life balance, which can lead to healthier and happier employees.

Veronica Carrion is an economic research associate at ABA.

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