2021 was the year of the “Great Resignation” – a year when workers quit their jobs at historic rates. According to some, the trend was driven by an economic and psychological shift as employers struggled – and often failed – to tempt anxious staff to return to industries that have too often treated workers as dispensable. The truth is more complicated.
It is accurate to say that many people have quit their jobs in 2021 – “quits”, as the Bureau of Labor Statistics calls them, hit an all-time high in September, with over 4.3 million people leaving their jobs, and was followed only by a modest reduction of that trend in October.
Quitting, most economists will tell you, is usually an expression of optimism. And yet, 2021’s quits happened against a larger economic picture that remains difficult to interpret with confidence. Pandemic-related cash from the government helped people weather the worst of Covid, but much of that cash is now gone. Unemployment rates have fallen sharply from their highs, and the labor force participation rates – the percentage of people in the workforce or looking for a job – are up, albeit modestly. All the while, inflation looms, and the Omicron variant looms larger.
Overall unemployment rate
Overall labor participation rate
Breakdown of participation rate by race and gender
The reasons for quitting or dropping out of the labor force are quite varied. The top reasons cited by experts continue to be lack of adequate childcare and health concerns about Covid, now exacerbated by Omicron. And while the framing of the Great Resignation places some emphasis on the idea that even knowledge workers are quitting from burnout or a sympathy with the budding anti-work movement, there are just as many reasons to suspect that many quit in search of better work opportunities, self employment, or, simply, higher pay.
Tellingly, some industries are seeing higher rates of quitting than others – leisure and hospitality, retail and healthcare being among the most affected.
These are generally low-paying industries where there are now more job openings than workers – a gap has been widening. Why not quit your $9 an hour job at the diner if the restaurant next door is paying $10?
While wage growth has been celebrated in the industries facing tighter labor market conditions in recent months, it is worth noting that these wage increases are moderating and that those changes mostly affected industries where many still struggle to make a living. The recent trend towards higher pay exists in the context of decades of low–wage growth, as until recently, wages in the US had stagnated.
The current competitiveness of the labor market – at least the proportion that is driven by gap between the high demand for workers and the supply of those searching for work – might be temporary.
Heidi Shierholz, president of the Economic Policy Institute, said: “Things are looking pretty tight given the available supply of labor that we have right now. But there are millions on the sidelines who will come in, once the labor supply-suppressing effects of Covid are in the rearview mirror.”
Even though labor participation had a small increase in October, it is important to note that it remains below pre-pandemic levels.
“We know there are millions of people who are still out of the labor force because of health and safety concerns. We know that parents are out of the labor force because of ongoing Covid-related care responsibilities.”
For Misty Heggeness, an economist at the US Census Bureau, this last aspect is particularly concerning as there is a growing gap between mothers and fathers in how they engage in the labor market.
“If we’re really going to bring gender equality into the 21st century, we have to have a serious reckoning with established gender norms around care.”
In her analysis of the employment outcomes of parents, she found that in September and October of this year, there were 1.4 million fewer mothers actively engaged with the labor force than those same months in 2019.
Mothers with college degrees and telework-compatible jobs were more likely to exit the labor force and more likely to be on leave than women without children. She also found that teachers are most likely to leave the labor force as compared to their counterparts in other industries.
For Heggeness, these trends suggest both an unequal distribution of labor at home and critical degree of burnout. Parents have suffered from what she calls “care insecurity” – even when children were enrolled in-person school this year, their schedules have been unpredictably interrupted by periods of quarantine prompted by exposure to Covid.
With the highly transmissible Omicron variant already reshaping the norms of the past few months, it is difficult to know whether the employment gains made in the second half of 2021 will hold.
As we enter the new year, it is tempting to interpret the high rates of quits as a labor market in which workers are more empowered than ever, but as child tax credits end and student loan payments resume and businesses consider temporarily closing their doors, the reality is that many workers face more precarity of circumstance than ever.
For those quitting in response to higher wages or greater health risks or greater care insecurity, it is not so simple as to think that they would prefer not to work, but rather, that they cannot afford to keep the jobs they have.