The Great Resignation: Here’s why your staff are moving on

It’s been exacerbated by the pandemic, but there are underlying factors that make switching jobs a more permanent trend.

Last year, according to the US Bureau of Labour Statistics, more than 47 million Americans voluntarily quit their jobs. This unprecedented mass exit from the workforce, spurred on by Covid-19, is now widely known as the Great Resignation.

The Great Resignation, we’re told, has up-ended the relationship between workers and the labour market. It’s true that a record number of workers quit their jobs last year. However, in the context of total employment during the past dozen years, it’s clear we’re living through not just short-term turbulence provoked by the pandemic but the continuation of a long-term trend.

From 2009 to 2019, the average monthly resignation increased by one-tenth of a percentage point each year. Then, in 2020, the resignation rate slowed because of pandemic-related uncertainty. That pause was short-lived. Last year, when stimulus cheques arrived and some uncertainty abated, a record number of workers quit their jobs, creating the Great Resignation. But that number included many workers who might otherwise have quit in 2020 had there been no pandemic.

We’re now back in line with the pre-pandemic trend, which is one American employers are likely to be contending with for years to come.

Five factors – exacerbated by the pandemic – have combined to yield the changes we’re living through in today’s labour market: retirement, relocation, reconsideration, reshuffling and reluctance.

Workers are retiring in greater numbers but aren’t relocating in large numbers; they’re reconsidering their work-life balance and care roles; they’re reshuffling, meaning making localised switches among industries; and, because of fears related to the pandemic, they’re demonstrating a reluctance to return to in-person jobs.

Looking at how these factors have contributed to the Great Resignation can help us understand the forces shaping worker behaviour.

RETIREMENT: Academic studies and online surveys have consistently found that the Great Resignation should be renamed the Great Retirement. Last year, older workers left their jobs at an accelerated rate, and they did so at younger ages. They made these decisions out of a desire to spend more time with loved ones and to focus on priorities beyond work; they made their moves with confidence thanks to surging stockmarkets and buoyant residential property values.

Also, a significant older cohort left because of their greater susceptibility to serious Covid-19 health risks. This pattern is different from the last crisis. During the Great Recession, between 2007 and 2009, there was a 1 per cent increase in the number of workers 55 years and older. During the Great Resignation, there was a 1.9 per cent decline.

RELOCATION: Unwillingness to relocate has played a material part in the Great Resignation. The overall movement rate in 2021 was the lowest for more than 70 years. Rates of relocation have declined steadily since the 1980s and Covid-19 has not reversed that trend. People who did move disproportionately stayed local; moving to a different state has remained the least frequent relocation.

RECONSIDERATION: Observers have suggested that the many deaths and pandemic-related serious illnesses have caused people to reconsider the role of work in their lives. That shift in perspective is likely to have motivated some workers to quit, especially those burning out in demanding jobs that intruded on their ability to care for their families. Women have been affected more than men, and younger age groups more than older ones.

Burnout has occurred notably among frontline workers, parents, caregivers and organisational leaders. Because care obligations fall disproportionately on women, industries such as hospitality, where women comprise the majority of hourly workers, have experienced larger numbers of resignations. A 2021 report found that one in three women considered leaving the workforce, switching jobs or cutting work hours. This is often a forced choice – many women have no option other than leaving to meet caregiving obligations.

RESHUFFLING: Bharat Ramamurti, the deputy director of the National Economic Council, recently coined the phrase the Great Upgrade to refer to the pattern of higher resignation rates in lower-wage industries. Accommodation and food services, as well as leisure and hospitality, had the highest resignation rates; retail trade and non-durable manufacturing experienced the greatest growth in their rates. But not all of these workers are leaving the labour market. Evidence shows that many are “reshuffling” – moving among different jobs in the same sector or even between sectors. According to an analysis conducted by the Economic Policy Institute in November last year, hiring rates are exceeding resignation rates across many sectors, which suggests high-wage growth is attracting new applicants to open positions – and that many workers are able and willing to accept jobs that are sufficiently attractive.

RELUCTANCE: Fear of contracting Covid-19 in the workplace has made many workers reluctant to return to the office. In a recent Pew Research Centre survey of 5858 working adults, 64 per cent of workers reported feeling uncomfortable returning to the office, and 57 per cent reported choosing to work from home because of concern about Covid-19 exposure. Research reported in the Harvard Business Review indicates many workers are prepared to quit if their employer does not offer a hybrid option.

The Great Resignation did not appear out of nowhere. Spurred on by the pandemic, it was a natural consequence of retirement, relocation, reconsideration, reshuffling and reluctance. Business leaders across industries will benefit from understanding which factors contribute to turnover in their organisations, and from developing specific responses to stem that tide as Covid-19 becomes endemic. During this shift, companies with the vision and resources to offer flexibility to their employees are the most likely to maintain a stable and competitive workforce.

Joseph Fuller and William Kerr are Harvard Business School professors and co-chairmen of the Project on Managing the Future of Work.

Copyright 2022 Harvard Business Review/Distributed by NYTimes Syndicate.