The ‘Great Resignation’ Started Long Ago

We are in the midst of breathtaking revolutions in how America lives and works. The work-from-home issue is still churning, but the impact is huge. If a whole class of people who used to go to the office stay at home, it will upend the commuter model on which modern cities are built and on which their income depends.

Another big issue has to do with labor shortages. You see this all around you. There are not enough people to fill available positions.

Retailers large and small are struggling to find and retain employees. Beaches and pools do not find lifeguards. The police forces cannot find young men and women to apply. The US Army finds no recruits. Medical offices scramble to fill a job when someone leaves. The airlines are so understaffed that for two weeks no one has been able to help you find your lost luggage. Nobody is there to keep it before losing. Recently, an official in a Midwestern city told CNN about the fight to hire police officers, “It’s like the American workforce is gone.”

The US Chamber of Commerce published a report “Understanding America’s Labor Shortage” by Stephanie Ferguson. The Chamber, she writes, hears every day from members “of every size and industry in nearly every state” that they face unprecedented challenges in filling vacancies. There are more than 11 million job openings in the US, but only six million unemployed.

So what’s happening right now? At the peak of the pandemic, more than 120,000 businesses temporarily closed, but the economy rebounded, adding an “unprecedented” 3.8 million jobs in 2021. But 3.25 million Americans have left the labor market — labor force participation for Americans age 16 and older is 62.2%, down from 63.4% in February 2020.

Several factors are at work. The Chamber notes that Americans have added $4 trillion to their savings accounts since the beginning of 2020. They had more money and less to spend thanks to “improved unemployment benefits, stimulus checks and the ability not to go out.” The extra few hundred dollars a week from increased unemployment “resulted in 68% of claimants earning more while unemployed than they did while they were working.” But the increased unemployment ended in September 2021.

Difficulty finding good childcare is also a deterrent for some from the workplace. During the pandemic, many childcare providers have closed or scaled back. Many working mothers have left their jobs during the pandemic, apparently choosing not to return. The labor force participation rate of working mothers increased from around 70% to 55% and has not yet fully reversed.

Part of the overall story is the phrase “the great resignation,” which began in the fall of 2020. Workers, especially but not only young people, began quitting their jobs in hopes of better conditions or opportunities. The Bureau of Labor Statistics reports that more than 47 million Americans will voluntarily quit their jobs in 2021. Much of this was pandemic-related: hiring came back, workers suddenly held the cards, a historic event unfolded: why not deal with it? -Evaluate your priorities? For some it really worked. Pew Research reported in March 2022, “Those who quit and are now employed elsewhere are more likely than not to say their current job offers better pay, more opportunity for advancement, and more work-life balance and flexibility.”

Fortune reported this week that the Great Resignation isn’t something that happened, it’s happening. The magazine cites a global survey of full-time employees and the self-employed, conducted for Microsoft,

which found that 41% “are considering leaving their current employer this year,” and another from McKinsey, which put the figure at 40% in the next three to six months. Bonnie Dowling, a co-author of the McKinsey report, told CNBC, “There has been a sea change in the mindset of workers and their willingness to prioritize other things in their lives beyond their job.”

Pretty much all the reports and research I’ve seen suggests that many people have seen the pandemic as an opportunity to transform not only their jobs but their lives as well. Some are quitting their jobs to start new businesses — the Census Bureau reported nearly 5.4 million business start-up applications in 2021, up from a previous record of 4.4 million in 2020. Some want to be more present with their families.

The shock of the pandemic was thought-provoking. Stimulus checks and increased unemployment helped facilitate big personal changes.

In the Harvard Business Review this spring, Joseph Fuller and William Kerr wrote that the Big Retirement was an “unprecedented mass exit” but also a return to a long-term trend that we “will likely struggle with for years to come.” The dropout rates have been increasing steadily for a long time. When the pandemic first hit, workers held on to their jobs for fear of layoffs and a recession. But by 2021, stimulus money hit the system and uncertainty was fading. That was when the Great Resignation hit. “We are now back in trend before the pandemic.”

It’s not just the boys. Part of the history of leaving the job in America has to do with early retirement. “In 2021, older workers were leaving their jobs faster, and at a younger age.” They felt empowered because their homes were suddenly worth more, they had retirement accounts, and they were afraid of getting sick.

There are good things in what we see. Workers, especially in low-skilled jobs, have more influence – they feel valued and can demand good treatment and better salaries. More and more mothers who want to stay at home with their children feel able to do so. But there is also cause for concern. The vacancies seem to create the perfect historical circumstances to usher in a new rise in robotics. And it means something that there are many who would like to join the army but are unable to meet their mental and physical health requirements due to obesity, among other reasons.

That brings us to Mene Ukueberuwa’s January interview in the Journal with American Enterprise Institute political economist Nicholas Eberstadt. Mr. Eberstadt notes that recent personnel changes follow a post-war pattern. Normally, male labor force participation falls after recessions, and when the recession ends, it rises again, “but never going back to where it was”. The labor force participation of both sexes peaked in 2000 at 67%. We are now 5 points below.

The employment rate for those in their prime, 25 to 54, has been declining since the turn of the century. The economic impact is obvious – slower growth, less expansion – and the personal impact is devastating. “By and large, non-working men don’t ‘make’ civil society,” says Eberstadt. They stay at home and look at screens – video games, social media sites and streaming services. There is something “fundamentally demeaning” about this, and Mr. Ebestadt speaks of an “archipelago of disability programs” that help make non-working possible.

Staying apart, alienated from life, and not sharing a larger mission can have “really tragic long-term consequences,” says Mr. Eberstadt. These young people take no chances and quit their jobs to start a small business. They don’t find each other. You don’t even search.

Jimmy Carter lost the 1980 general election to a landslide victory against Ronald Reagan, so it’s hard to see why Joe Biden continues to follow Carter’s “malaise” playbook today. Bettman via Getty Images/Shutterstock Composite: Mark Kelly

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