Mercer economist explains the ‘great resignation’ and what it means for the workforce

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“Now hiring” and “help wanted” signs are a common sight on store windows and doors these days.

In November, 4.5 million Americans permanently quit or changed their jobs, and 10.6 million job openings were reported, according to the most recent figures from the U.S. Bureau of Labor Statistics. This marked the fourth month in 2021 in which a record number of people left their positions. 

In a time of change coined the “great resignation,” the “big quit” and the “great negotiation,” the workforce has become an employee’s market where employers must bring competitive offers to the table.

Dr. Myriam Quispe-Agnoli, associate professor of economics at Mercer University’s Stetson-Hatcher School of Business, explained what’s happening and what it means for the workforce.

Great resignation

Unemployment rates skyrocketed to 14.8% at the beginning of the pandemic but have since recovered, with the November 2021 rate at a low 4.2%. But the unemployment rate is only one piece of the larger workforce picture, which helps explain how it can be so low when a record number of employees are quitting, Dr. Quispe-Agnoli said.

The unemployment rate does not count people who leave their jobs and stop looking for work, only those who are out of work or quit and are still searching. Therefore, the 4.5 million people who quit permanently or changed their jobs in November are not included in the unemployment statistics.

Dr. Myriam Quispe-Agnoli

It’s not unusual for fewer people to quit their jobs voluntarily during periods of economic decline, and as things get better, more people will start to quit if they’re not happy. While the number of “job leavers” increased gradually over a matter of years with the recovery of the 2008 recession, the resignations happened at a rapid pace as the economy opened back up during the pandemic. 

So, what has changed that’s made so many more people quit their jobs? Dr. Quispe-Agnoli said workforce demographics have a lot to do with it. 

The pandemic has brought many older workers into a situation requiring more use of technology. Coupled with concerns for their health, some have decided it’s the right time to hand in their notices. On the other side, a need for a better work-life balance has spurred members of the younger generation to resign. 

“They already had that idea, but COVID accentuated that and put an emphasis on balance. They quit because they couldn’t find that balance in the occupations that they had, or they start negotiating how they will work,” Dr. Quispe-Agnoli said. 

Primary caregivers of children and elders have been greatly impacted by the pandemic. With day cares closed and some health services halted, many people were left to work from home while also caring for their loved ones. Some opted to quit their jobs if their partner was employed full time, and some have not returned to the workforce. 

Some of the largest number of job openings are in the retail; education; health services; hospitality; food services; manufacturing; and trade, transportation and utilities industries. These occupations may have lower wages and fewer benefits, prompting people to decide the work isn’t worth it anymore. 

“COVID makes you think, I want to do what I like. Life is short,” Dr. Quispe-Agnoli said.

Great negotiation

This “great resignation” has turned into a “great negotiation” for job seekers. Now is an opportune time for people to find a job they want and negotiate for a better salary, benefits and flexibility. 

“This is the employee’s market. This is such a difficult time for employers and business owners to find skilled workers for the job openings. Employers are providing benefits, bonuses. Pre-COVID, people were insisting to increase the minimum wage. Nobody talks about the minimum wage anymore. Now, I will pay you more because I need you,” Dr. Quispe-Agnoli said.

As a result, employers and business owners are going to have to start rethinking their productive processes and how they do business. 

“If the labor force is going to be more expensive, they are going to adjust their processes and reduce any waste and inefficiencies, any problems they have, in order to use that expensive labor force accordingly,” Dr. Quispe-Agnoli said. “They will hire people, but expectations are going to be higher.”

That means job candidates are going to need to stay on top of their education, training and technical skills to meet new demands of the job market.  

“Yes, it’s a good time to look for a job; it’s a good time to negotiate. But also recognize that you have to keep up,” she said. “You have to keep polishing your skills and be on the frontier of the requirements of your position.”

 

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Andrea is a digital content specialist at Mercer. She creates and maintains written and multimedia content for primary University web pages. She ensures a consistent, University “voice” throughout various forms of online communications platforms. She also plans and executes campaigns for the primary official Mercer University social media accounts.