2021 has been called the year of “The Great Resignation,” since millions of Americans left their jobs. But why that trend happened and what the impact will be is an unfolding tale featuring often-contradictory narratives.
Did workers really just get lazy and decide not to work, as some suggest? Are they now self-employed as Uber drivers and food delivery folks?
Pew Research Center this week released a study that found most workers who quit were reacting to low pay, few advancement opportunities and a demoralizing sense they weren’t respected in the workplace. Most didn’t quit working entirely; they just quit their employers. Many quitters traded up to better benefits, better pay and more flexibility, Pew found.
If most workers are just changing jobs, though, why are “We’re hiring” signs nearly ubiquitous these days? Some are plastered atop business buildings in letters two feet tall.
Economists and other labor force experts say three facts are indisputable:
- Curbs on immigration, including legal immigration, have created openings for well-paid, skilled laborers in fields like technology and even more in the hospitality and service sectors where wages are lower but work is done in person. Those businesses are hurting.
- A significant number of workers — mostly women — left jobs to care for children and others during the pandemic. Many do not yet feel able to return to work or entrust that caregiving to others.
- Retirement has greatly impacted employment. Some people retired a little early to get away from the risks of COVID-19 and others chose not to step back into the kind of part-time work popular in recent years with older workers who left full-time careers.
People want to work, experts say, but they are now more deliberate in choosing where and when. They want jobs that let them afford housing and other essentials, provide benefits and offer decent work-life balance.
The number of recent resignations wouldn’t have been so startling had they occurred at a normal rate over the past two years, said Erica Groshen, a senior economics adviser at Cornell University’s School of Industrial and Labor Relations and a research fellow at the Upjohn Institute for Employment Research. But the pandemic led what quite likely would be an uneventful amount of job changes to occur in a very narrow time frame.
People want to work
For most Americans, work is not a luxury. One-third of women and one-fourth of men say they could live on their savings for less than a month, according to the 2021 American Family Survey, which was conducted by YouGov for the Deseret News and Brigham Young University’s Center for the Study of Elections and Democracy.
The survey showed that, overall, close to 3 in 10 adults said they could survive less than a month on their savings, while just under 25% said their savings would carry them one to three months. About 1 in 7 estimated that they’d be OK for between three and six months, while just one-third said they could stretch savings at least six months. The poll was conducted in late June and early July and had a margin of error of plus or minus 2 percentage points.
The American Family Survey found that those without jobs, those in low-income households and those with a high school diploma or less were the least apt to be able to cover more long-term needs with their savings. Thirty-five percent of those not married said they would not last a month, compared to nearly 21% of those who are married.
Other surveys also document financial need to work. An estimated 70% of American adults said they lived paycheck to paycheck at some point during the pandemic, including nearly half who say they’re doing that right now, according to a survey by Clever Real Estate, a real estate and personal finance data company.
But even financially strapped Americans don’t want just any job. Workers want jobs that allow them to afford basics, from housing to food to health care. And in survey after survey, many — especially those without college degrees — say they aren’t finding them.
For a half-century, the “median wage has been essentially stagnant in real terms” though productivity has been rising, according to Groshen.
Although “profits have been quite high,” she noted, “The median worker has not seen the benefits of that in wages.”
Instead of raising wages, some companies have kept their expenses low and welcomed anyone willing to work, accepting high turnover as simply what happens. Meanwhile, the costs of basics like housing and food have risen.
“These companies are almost always crying labor shortage. What’s new is that now it’s real,” Groshen said. “Now they really are running into problems.”
The greatest impact on work
Some factors driving current hiring challenges, including wage levels and immigration policies, posed a workplace problem before the pandemic began. Others, including women leaving jobs to care for their kids, are a result of COVID-19, experts said.
The pandemic impacted caregiving and public transportation — making both less accessible and more risky. Those are important factors in whether some folks can work.
Among those with children under 18, US News & World Report reported nearly half said child care issues led to quitting. Of those, 31% blamed said COVID-19.
Many employers now also require a college degree for occupations that had never needed one, Groshen said. HR department algorithms sometimes shut people out entirely for that reason, although the job situation right now is opening doors to more workers who are not college graduates.
Still, “if you lost your job, or you had attained some advancements on the basic skills you’ve developed on the job, you’re often thrown back to the equivalent of somebody who had no work experience when you’re in the market,” she said.
Immigration policy has also greatly impacted the workforce, especially in sectors like elder care, hospitality, restaurants and other services. Legal immigration is an important source of workers, says Matthew S. Rutledge, a research fellow at Boston College’s Center for Retirement Research.
A common complaint is that immigrants take American jobs. But immigrants are also sought for both high-skill, well-paying technical jobs and low-paying service jobs, experts told the Deseret News.
Groshen notes that legal immigration has been restricted for some years now, so the workforce pool was stressed even before the pandemic began. She said the low-paying, low-skill jobs were more affected by the pandemic because they have to be done in person, while more skilled, technical jobs were more likely to be doable remotely.
Older folks leave work
Retirees left the workplace recently in perhaps the largest numbers, although the impact of this shift may not be felt as deeply.
In November, Pew Research Center senior researcher Richard Fry pointed out that more workers 55 and older are retiring. After the Great Recession, retirement had slowed and more older workers had jobs, a trend dating back to the late 1990s, perhaps influenced by a Social Security policy change so those who reached full retirement age were no longer subject to a reduction in benefits based on earnings.
The pandemic-fueled drop in older workers might be a blip, Fry wrote, noting labor force projections from the Bureau of Labor Statistics project significant growth in labor force participation among older adults from 2020 to 2030. As many as 4 in 10 people 65-69 might be working by 2030, compared to 33% in 2020,.
A recent brief by the Boston College Center for Retirement Research suggests “unretirement” could help ease the labor shortage. Researchers Geoffrey T. Sanzenbacher and Rutledge suggest opportunities to work remotely and the high rate of job openings could lure some out of retirement, though they don’t predict it will woo back very many. They estimate around 15 million Americans are in the work-friendly age grouping between 55 and 70.
Historically, an average of just over 6% of retirees rejoin the labor force, based on data from 1978 to 2019, they wrote.
Rutledge said many of the workers who retired would have left within a few years, but the pandemic pushed up their timeline. While he’s “floated back and forth on whether COVID has been a retirement story, I’m now back to thinking that it is.”
It may be harder for older adults to find jobs if they’ve declared themselves retired. Potential bosses may worry a formerly retired worker will leave when he has a bad day. And most retirees find it easy to establish new habits that don’t necessarily center on work, Rutledge added.
While retirement definitely factors into the rise of the help-wanted sign, Rutledge agrees with experts who believe the immigration curbs and women leaving to be caregivers had a greater impact, though retirees may make up the largest actual number. Retirees were leaving anyway at some point in the near future.
The immigrants who didn’t arrive would have been in the workforce longer into the future, “providing future generations of children that would become workers and social insurance participants for us who aren’t here and may never be here,” Rutledge said. “And women are leaving the labor force in some of their prime working years because of concerns about childcare and education,” possibly impacting the rest of their careers.
He added, “It’s just unfortunate that both of those situations are coming at exactly the wrong time from our labor shortage perspective.”
Not all bad – for workers
While would-be employers are worried, Rutledge believes there’s good news buried in current trends, especially for older workers and people with disabilities who want jobs.
“I think it’s been really good news for them and employers are clearly a lot more accommodative to their needs. I think there’s never been a better time for workers with needs like that,” he said.
The prospect for older workers becomes better when the people making hiring decisions are a bit older, as well. “If you are an older person holding a human resources position or management position, and you’re interviewing somebody who’s older, you’re going to be more favorably disposed towards them than maybe a younger person with all their preconceived notions about aging,” Rutledge said.
“But the longer this goes on the more I worry it will cause other problems like inflation,” he added.