The Great Resignation, also known as the Big Quit and the Great Reshuffle, was a mainly American economic trend in which employees voluntarily resigned from their jobs en masse, beginning in early 2021 during the COVID-19 pandemic. Among the most cited reasons for resigning included wage stagnation amid rising cost of living, limited opportunities for career advancement, hostile work environments, lack of benefits, inflexible remote-work policies, and long-term job dissatisfaction. Most likely to quit were workers in hospitality, healthcare, and education. In addition, many of the resigning workers were retiring baby boomers, who are one of the largest demographic cohorts in the United States.
Some economists have described the Great Resignation as akin to a general strike, especially with regard to retail workers. However, workforce participation in some regions had returned to or even exceeded the pre-pandemic rate. This suggests that instead of remaining out of the workforce for extended periods (which can be financially difficult, especially at a time of high inflation), many workers were simply swapping jobs. Some regretted quitting their old positions.
The term "Great Resignation" was coined by Anthony Klotz, a professor of management at University College London's School of Management, in May 2021, when he predicted a sustained mass exodus. In response, businesses have increased the rate of automation, creating a boom in robotics and artificial intelligence. Furthermore, while workers might feel empowered by being able to quit as soon as they see fit, they might struggle to climb up the career ladder due to their lack of experience and professional connections. Klotz later predicted the plateauing of the quit rate in 2023, and the end of the Great Resignation. By mid-2023, the quit rate more or less returned to what it was in 2019.
Background
Between December 2000, when quit rates were first measured by the United States Department of Labor, and February 2021, roughly a year following the beginning of the COVID-19 pandemic, the U.S. resignation rate never surpassed 2.4% of the total workforce per month. High quit rates indicate worker confidence in the ability to get higher paying jobs, which typically coincides with high economic stability and low unemployment rates. Conversely, during periods of high unemployment, resignation rates tend to decrease as hire rates also decrease. For example, during the Great Recession, the U.S. quit rate decreased from 2.0% to 1.3% as the hire rate fell from 3.7% to 2.8%.
Resignation rates in the U.S. during the pandemic initially followed this pattern. In March and April 2020, a record 13.0 and 9.3 million workers (8.6% and 7.2%) were laid off, and the quit rate subsequently fell to a seven-year low of 1.6%. Much of the layoffs and resignations were driven by women, who disproportionately work in industries that were affected most by the lock-downs, like service industries and childcare.
As the pandemic continued, however, workers began to quit their jobs in large numbers despite initially high unemployment. The hospitality industry was especially negatively impacted during this time, which will present new challenges and opportunities for its eventual recovery.
Causes
According to Microsoft's Work Trend Index, more than 40% of the global workforce considered quitting their job in 2021. The COVID-19 pandemic allowed workers to rethink their careers, work conditions, and long-term goals. As many workplaces attempted to bring their employees in-person, workers desired the freedom that remote work afforded them during the COVID-19 pandemic, as well as schedule flexibility, which was the primary reason to look for a new job of the majority of those studied by Bankrate in August 2021. Additionally, many workers, particularly in younger cohorts, are seeking to gain a better work–life balance. In the U.S., connections are also being drawn to reported increases in workplace stress and employee burnout. Moreover, millions of people now have long COVID; this disability can alter the ability or desire to work. Lambert (2022) finds that the concept of labor market segmentation is useful in explaining resignation rates across different industries.The Great Resignation in the US: A Study of Labor Market Segmentation https://mpra.ub.uni-muenchen.de/114067/
Restaurants and hotels, industries that require in-person interactions, have been hit the hardest by waves of resignations. COVID-19 stimulus payments and rises in unemployment benefits allowed those who relied on low-wage jobs for survival to stay home, although places where unemployment benefits were rolled back did not see significant job creation as a result. On the other hand, many workers who felt dissatisfied with their jobs reported that they cannot resign due to economic barriers. Sekou Siby, president and CEO of the U.S. nonprofit Restaurant Opportunities Center United, commented, "There's more competition across industries, so workers are feeling more empowered than ever before, but that doesn't mean everyone is able to leave their current jobs."
According to a study conducted by Adobe, the exodus is being driven by Millennials and Generation Z, who were more likely to be dissatisfied with their work. More than half of Gen Z reported planning to seek a new job within the next year. Harvard Business Review found that the cohort between 30 and 45 years old had the greatest increase in resignation rates. Racial minority, low-wage, and frontline workers are also more dissatisfied with their work in the United States, according to the asset management firm Mercer.
An IMF working paper by Carlo Pizzinelli and Ippei Shibata focused on causes of the loss in employment within the U.S. and U.K. labor markets in comparison to pre-COVID-19 levels. They identified job mismatch (that is, mismatch between the areas where people search for work and where the most vacancies are) as playing a "modest" role, being less significant than after the 2008 financial crisis. The effect of the pandemic on women, sparking the so-called "She-cession", was deemed as accounting for some 16% of the total U.S. employment shortfall but little to none of the shortfall in the U.K. Meanwhile, the authors attribute 35% of the shortfall in both the U.K. and U.S. to older workers (aged 55–74) withdrawing from the labor force. On the other side, Harvard Business Review reported resignation rates for those aged 60–70 actually fell in 2021 (in comparison to 2020 rates).
Some suggested that the tightness of the labor market was not due to workers resigning en masse or turning towards self-employment, but instead due to a shortage of migrant workers caused by travel restrictions during the pandemic and a general rise in anti-immigrant sentiment.
Impacts There is disagreement as to whether or not the Great Resignation is having or had a lasting effect. Although quit rates remained high in late 2021 and early 2022, many workers in Western countries returned to the labor force in large numbers. In general, an aging population and a labor shortage accelerate industrial automation, not just to replace the "missing" workers but also to cut costs.
In the United States
According to the Bureau of Labor Statistics, a total of 47 million Americans quit their jobs in 2021. Resignations are consistently the most prevalent in the South, where 2.9% of the workforce voluntarily left their jobs in June, followed by the Midwest (2.8%) and the West (2.6%). The Northeast is the most stable region, with 2.0% of workers quitting in June. The COVID-19 stimulus checks likely provided the financial security needed for many workers to voluntary resign their positions. Furthermore, some of the people behind the Great Resignation were retiring Baby Boomers, the youngest of whom reached their mid-60s in the early 2020s. According to the Federal Reserve Bank of St. Louis, many Baby Boomers chose to retire early during the pandemic, resulting in 2.4 million more retirements than predicted between February 2020 and August 2021.
According to a PricewaterhouseCoopers survey conducted in early August 2021, 65% of employees said they were looking for a new job and 88% of executives said their company was experiencing higher turnover than normal. A Deloitte study published in Fortune magazine in October 2021 found that among Fortune 1000 companies, 73% of CEOs anticipated the work shortage would disrupt their businesses over the next 12 months, 57% believed attracting talent is among their company's biggest challenges, and 35% already expanded benefits to bolster employee retention.Workers in the leisure and hospital industries had relatively high quit rates. In October 2021, the U.S. Bureau of Labor Statistics reported that food service workers' quit rates rose to 6.8%, which is well above the industry average of 4.1% over the previous 20 years and still higher than the industry's quit peaks of 5% in 2006 and 2019. The retail industry had the second highest quit rates at 4.7%. From the start of the pandemic to November 2021, approximately one in five healthcare workers quit their jobs. Amidst the Great Resignation, October 2021 saw a strike wave known as Striketober, with over 100,000 American workers participating in or preparing for strike action. While discussing Striketober, some economists described the Great Resignation as workers participating in a general strike against poor working conditions and low wages.
By August 2022, however, the U.S. workforce had surpassed its size from before the COVID-19 pandemic. Many American workers took advantage of the labor shortage to trade their current jobs for those with higher salaries, more benefits, and better schedules. Some have started or joined labor unions. A number of prospective employers are also offering paid training in order to attract recruits. Still, the recovery of employment has been uneven, as low-wage sectors—especially leisure, hospitality, retail, manufacturing, and education—lose jobs to those that offer higher income. Although retirees (who need to supplement their incomes) have returned at a rate not seen since 2019, it remains unclear whether workers aged 55 and over, people more likely to quit, will ever return. Many older workers decided to retire during the pandemic, continuing a long-term trend in the U.S. labor market of growing rates of voluntary quitting dating back to 2009. Unsatisfied with their current positions, a record number of Americans quit to start their own businesses, only to face an acute labor shortage they helped to create. In fact, small businesses are the most likely to struggle to find qualified recruits. Some 16 million Americans suffer from long COVID, and of these, 2 to 4 million are kept out of work because if it. The shortage of workers has exacerbated the disruption of the domestic supply chain of the United States.