What Is the Great Resignation?
The Great Resignation describes the elevated rate at which U.S. workers have quit their jobs starting in the spring of 2021, amid strong labor demand and low unemployment as vaccinations eased the severity of the COVID-19 pandemic. Anthony Klotz, a professor of business administration at Texas A&M University, coined the term in May 2021, attributing the phenomenon to pent up demand from workers who deferred decisions to quit earlier in the pandemic.
- The primary cause of the Great Resignation is likely intense competition for workers as reflected in a high number of job vacancies and a lower unemployment rate.
- Sectors hit hardest by the COVID-19 pandemic, such as accommodations and health care, have tended to have the most job openings.
- The pandemic caused some workers to exit the labor force while others have reduced hours, contributing to competition for available labor.
- The quits rate is heavily influenced by the pace of hiring, and could slow once the job market cools.
Understanding the Great Resignation
Though each individual’s reasons for changing jobs or leaving the workforce are tied to personal circumstances, there is no question that the arrival of COVID-19 and related job losses immediately curbed voluntary exits by employees. The quits rate tracking voluntary separations from employment for reasons other than retirement plunged from a typical 2.3% in February 2020 to 1.6% two months later in the Job Openings and Labor Turnover Survey (JOLTS) by the U.S. Bureau of Labor Statistics (BLS).
Employees often quit jobs after accepting a better one elsewhere, so to a large extent the drop reflected the decline in hiring for new positions. Others undoubtedly delayed a planned exit, whether to start their own business or for another reason, amid the economic turmoil at the outset of the pandemic.
With the arrival of COVID-19 vaccines and the accompanying economic rebound, hiring has picked up, even as those who delayed quitting for other reasons finally felt comfortable about proceeding.
Some have suggested the quits rate may also have risen for other reasons tied to the COVID-19 pandemic:
- Pandemic experiences led some workers to re-evaluate life priorities and reduce working hours or leave the labor force entirely.
- Employers demanded employees return to the office after allowing remote work in 2020.
- Mistreatment by employers and customers during the pandemic pushed workers to leave as other options became available.
- The labor force participation rate has been slow to recover from pandemic lows, fueling the competition for workers.
- Some people left work because they could not obtain childcare as schools shifted to remote learning, while others did so because they wouldn't comply with workplace COVID-19 vaccination requirements.
Notably, though, the top reasons given by the workers who quit in a Pew Research Center survey conducted in February 2022 were low pay and a lack of advancement opportunities, suggesting many left for a better offer.
Harvard economist Jason Furman argued in June 2021 that the elevated rate of people leaving their jobs was in line with the rising number of job openings, suggesting competition among employers was driving resignations.
A record 4.5 million workers quit jobs for reasons other than retirement in March 2022, representing an increase of 152,000 from February 2022, according to JOLTS data. Job openings of 11.55 million at the end of March were also the highest on record.
|Percent of Workers Who Quit Their Jobs, All Industries and Regions|
Source: Federal Reserve Bank of St. Louis
The industries with the highest resignation rate in March 2022 were accommodation and food services (6.1%) and retail trade (4.5%). Accommodation and food services was also the industry with the highest job openings rate at 9.9% in March 2022, though that was down from 12.2% three months earlier. Health care and social assistance was next with an openings rate of 9%.
|Job Openings as a Percent of Total Jobs Plus Openings, All Industries and Regions|
Source: Federal Reserve Bank of St. Louis
According to the 2022 Work Trend Index survey by Microsoft Corp. (MSFT), 43% of workers said they were somewhat or extremely likely to consider changing employers in the current year, up from 41% a year earlier. For U.S. Gen Z and Millennial workers the figure stood at 58%, and rose to 60% for U.S. workers hired during the pandemic.
Another survey conducted in November 2021 found 23% of U.S. workers planned to quit over the next year. The top reasons cited were the desire working conditions, burnout and the pursuit of higher pay.
How Can Companies Prevent Employees From Leaving During the Great Resignation?
Klotz says companies can retain employees who are burned out by giving them a break and more support. Experts say employers can offer more accommodating work arrangements, including remote work, hybrid work, and flexible schedules. And they can listen to what employees say they want and need instead of making tone-deaf, top-down decisions.
What Are the Signs of Burnout at Work?
Burnout looks different in different lines of work. A burned-out respiratory therapist or veterinary technician may have experienced a level of trauma at work beyond that risked by a typical office employee. In general, common burnout symptoms include exhaustion, cynicism, and a sense of ineffectiveness. Poor working conditions including routine exposure to COVID-19, understaffing, insufficient time off, and emotional abuse have contributed to burnout during the pandemic.
Is the Great Resignation Just a Great Exaggeration?
The proof if there in the elevated quits rate tracked by JOLTS, which matched a series high at 3% in March 2022. But if hiring were to slow, causing unemployment to tick up, the quits rate would likely decline accordingly.
U.S. Bureau of Labor Statistics. "Job Openings and Labor Turnover Summary: October 2021."
FRED, Federal Reserve Bank of St. Louis. "Nonfarm Quits Rate."
The New Yorker. "Why Are so Many Knowledge Workers Quitting?"
The American Prospect. "The Great Escape."
FRED, Federal Reserve Bank of St. Louis. "Labor Force Participation Rate."
Peterson Institute for International Economics. "US Workers Are Quitting Jobs at Historic Rates, and Many Unemployed Are Not Coming Back Despite Record Job Openings."
Bureau of Labor Statistics. "Job Openings and Labor Turnover – March 2022," pp. 1-2.
U.S. Bureau of Labor Statistics. "Job Openings and Labor Turnover – March 2022," Page 11.
U.S. Bureau of Labor Statistics. "Job Openings and Labor Turnover – March 2022," Page 8.
Federal Bank of St. Louis. "Job Openings: Total Nonfarm."
Microsoft Corp. "2022 Work Trend Index Annual Report," Page 38.
Microsoft Corp. "2022 Work Trend Index Annual Report," Page 56.
The Boston Globe. "'The Great Resignation' Is Looming: Why People are Quitting Their Jobs Post-Pandemic."
Harvard Business Review. "Don't Force People to Come Back to the Office Full Time."
The New Republic. "Burnout Syndrome Is Real But Exaggerated in America."
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