5 Key Drivers of the "Great Resignation"

Take this job and shove it!

By now you have certainly heard of the Great Resignation or "The Big Quit." But what's behind it??What are the reasons??

Starting around April, American workers have been resigning their jobs at an alarming rate. More than 20 million people resigned, including a record 4.4 million in September alone! Is everyone suddenly flush with cash and not needing an income?

Not so fast. The other headline from the September Job Openings & Labor Turnover Survey ?(JOLTS) was the 194,000 net improvement in employment. So, quick math tells us that there was roughly 4.6 million new hires – many of which were same people as the 4.4 million quits. The October jobs report announced net new gains of 530,000, and November numbers just released were at 210K...so there actually is a ton of hiring happening.

Mostly, what we are seeing is job transition / upgrade. Everyone is just trying to improve their lot in life. And who can blame them?

"It's time to make the doughnuts … punch the clock … working that 9 to 5…" The 40+ hour workweek was a product of the industrial revolution and has served our nation well for a century. But might its days be numbered?

As it turns out, when you give people a year-and-a-half paid vacation, it fundamentally changes them.

Prior to COVID-19, most of the working class was toiling, stretched thin, with little to no savings and limited personal time. Income / wage disparity in the United States was awful and getting worse, although there was little political will to address it in a wise, protracted and purposeful manner.

So, the political response to the pandemic was actually a significant financial blessing for most, given that the Median Annual Personal Income in America is around $35,000. The expanded and extended unemployment benefits along with multiple stimulus checks, netted many people more weekly income than when they were actually working. (This does not consider rental assistance, expanded access to SNAP food stamps, student loan deferments, eviction moratoriums and so forth.) Not only were they making the same or more money, but they were also spending less. Not paying for the commute, childcare, dry cleaning or even their student loans. You couldn't go out to eat, or to the movies, or vacation, for example. The bottom line is that loads of Americans were suddenly flush with cash, relatively speaking.

With more disposable income in their pocket and no "clock to punch," this was the first real taste of freedom for many. They finally had time (and money) to stop, think and re-evaluate. Meanwhile, COVID-19 realities (combined with our sensationalized news cycle) was a stark reminder of how precious and fragile life was. This experience has changed the mindset for many of us. After all, "work" is your single biggest block of waking hours you will spend in your life … maybe it shouldn't suck?

What's driving "The Big Quit"?

1. The Value Proposition – This job is just not worth it.

• "I now understand the value of free-time, I work out, get time with kids, etc."
• "For $2/hr less, I can get freedom, fun, flexibility – in a comfortable environment."
• "I've been making the boss and shareholders a lot of money but there is no upside for me. The American dream is gone. I no longer believe I can grind my way to the top, so what's the point?"
• "You're treating the new hires better than me! I stuck around when you needed me… where's my "signing bonus?"

2. Simply Supply & Demand.

There are TONS of jobs / postings / opportunities (over 10 million) but far fewer candidates. In fact, there are 0.7 job seekers per job opening at the moment! Candidates are in the driver's seat and they know it.

3. "Time to go it alone…" The rise of the Independent Consultant?

Starting in the summer of 2020, there's been a massive surge in new business filings: A record 1.4 million new business license / EIN applications this year just through September.?Many are freelancers or?Independent contractors on platforms like ESTY, Upwork, Fivver or etc.?

In the last 19 months “payroll employment” has risen by 18.5 million workers while “civilian employment” has climbed by 21.8 million.?Implying that self-employed workers have risen 3.5 million since the end of the recession!

"After I deduct the commute and child care costs, I was netting about $6 per hour.. that's not enough to sacrifice my time… I net nearly that doing what I enjoy."

Meanwhile, with the stock market (and IRA / 401k) at new highs, and home equity through the roof, a record number are comfortable with early retirement.?Roughly 3M people over the age of 55 retired (permanently left the workforce) since the pandemic began - about double the normal rate.

4. Access, Awareness & Ease

For most of the last 40 years, employers had the upper hand – they could be picky, and it was difficult to find opportunities and apply. Neither of those are true today.

Even if you were aware of social programs like unemployment, SNAP, child care credits, or rental assistance prior to lock downs, most people had never taken the time to investigate these options – now they have.

Same with job searching. You certainly heard the commercials from Monster, Indeed, and ZipRecruiter, but if you were employed, you probably hadn't taken the time to investigate how it works. Now, everyone knows how simple it is. You don't even need a resume… just Google XYZ Job near me and a dozen options will appear.

5. The publicized excuses are also real.

• Whether it is Delta variant or the new Omicron – some people are still fearful of getting sick. And frankly, some work environments are indeed more susceptible to exposure. So they are not jumping back to work.
• Child / elder care is a very significant issue.?Both Caregivers and Educators in high demand and short supply; this crisis is being further complicated by long-term professionals pivoting away from the taxing and now dangerous role. Until parents are confident that schools will be "in person, full time," someone has to stay home with Junior. All too often these child / elder care roles are falling to the lady of the home, which is way this economic jolt has been much worse for women wanting to return to the workforce. It's been called the 'She-cession."

It will be interesting to see who wins the blinking contest: Will candidates run through their savings and low interest credit, forced to return to work or will employers start losing enough customers and have to up the ante? Can they make meaningful improvement to working conditions and afford to pay more? Or will this divide spur more technology and automation to reduce the personnel needs?