Taking A Closer Look At The ‘I Quit’ Economy

i quit economy

You’ve seen the signs. Literally. The signs taped to the windows of our favorite fast-food and fast-casual restaurants.

“We are short staffed. Please be patient with the staff that did show up. No one wants to work anymore.”

“Closed due to no staff.”

“We are closed. No employees. No one wants to work.”

But here’s my favorite — that comes courtesy of Dave’s Pizza in Birmingham, Alabama.

“We Will Literally Hire Anyone. If You Can’t Find A Job, Call Us, We’ll Hire You.”

This isn’t just a restaurant phenomenon. These signs tell a broader story of the seismic fluctuations that are happening in the U.S. economy and workforce.

We all know firsthand that it’s frightening to leave a job. Whether it’s enduring grueling commutes in Atlanta traffic or managing difficult work relationships, people tend to stick to it at work unless something truly better comes along or there’s a shakeup in their industry. In fact, quit rates throughout economic history are but a small percentage of folks leaving work — the major forces in workplace moves are traditionally layoffs and forced separations.

Today, however, in our post-COVID reality, people are calling it quits on their employers in droves. So much so that there’s a question of whether we’ll ever get back to “business as usual.”

Statistics show that almost 11.5 million Americans voluntarily left their job during the three-month period of April through June of this year — a mass exodus. In April, 4.0 million individuals quit their jobs. That alone topples the highest reported quit rate in Bureau of Labor Statistics (BLS) history. Keep in mind that the “I quit” statistic points to workers who are typically headed to another job opportunity, leaving to start their own venture, etc., but does not include those who are retiring.

Quit rates differ based on a handful of economic variables. When the economy is faring poorly, we typically see low rates of voluntary job separation. The flip side of the coin is that people are more likely to leave their positions when the economy is doing well because the market is flush with other opportunities.

Historically, quit rates have been steady, falling in the 1% to 2% range for a given industry segment. For example, the five-year period from October 2008 through October 2013 — which included the shocks of financial crises and the Great Recession — saw a quit rate of under 2% during a rough economy.

During the early days of the pandemic, when millions were losing their jobs, the quit rate was only 2.1%. It even dropped as low as 1.8% in April 2020.

Fast-forward a year later to April 2021, when we rocketed up to 3.1%. It may not sound like big news, but this data spike indicates a 72% increase in people quitting their jobs. This is a seismic shift in our labor economy.

While the BLS reports the numbers, the agency doesn’t comment on the “why.” But taking a look at current realities brings the picture into focus. Our country has undergone massive economic changes, such as economic shutdowns, industry restrictions, extra unemployment insurance benefits, and, of course, health risks. At the workplace, there’s been extreme tension between company owners or managers and human resources over what to do to keep workers safe and the business running. Disagreements have mounted over whether employees can do their jobs safely on-site or whether work-from-home policies should be implemented. Add these factors together, and you have a recipe for an unstable labor economy.

From April through June of this year, different industries have seen employees walk at disparate rates. Accommodation and food service employers saw the largest surge in workers quitting at more than 2.1 million. Retail trade, health care and social service have also seen a surge in the quit rate. During this three-month period, the retail industry saw almost 1.9 million people leave their jobs, and the health care and social assistance sector clocked in at 1.45 million quits.

All of these data points are unprecedented departures from historical trends.

Despite massive spikes in these labor sectors, not all industries have seen folks leave their jobs. The real estate industry is booming right now, and people here are staying put. In banking, investments and insurance, the conversion from at-office to work-from-home life has been relatively smooth; quit rates in these industries have stayed extremely low. And federal and state government positions have remained stable.

What can we interpret from the tremendous movement in the labor market? In short, there’s no unringing the bell; COVID and its wake will forever leave an impact on our labor economy.

The present trends aren’t necessarily bad. While they indicate significant shifts in the American labor economy, employees’ desires for improved workplaces are driving these transitions. Now that we’ve gotten a taste of work-from-home (or work-from-anywhere) life, many Americans want to hold onto it. People are in search of higher salaries and better benefits. Personal fulfillment is a key driver, too.

Our takeaway is this: Employees now demand the flexibility they’ve known for the past year and a half. And people leaving their jobs at massive rates isn’t an anomaly that we can ignore. We’ve seen over 20 million people quit their job in 2021 — a staggering number. But I believe that, on balance, it’s a positive for workers.

The current quit rates indicate a change in bargaining power; the American labor force is calling the shots. Companies are listening — and hiring.

 

Read the AJC Article Here

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