Millions Quitting Their Jobs & That's Not Necessarily Bad

Since the pandemic has started to wind down, millions of American workers have been quitting their jobs. While businesses may not like this, it is not necessarily a bad thing. Most of these workers are finding new jobs -- jobs with a higher wage and a better chance for advancement.

Here is how Jennifer Rubin describes this in The Washington Post:

In tracking the millions of employees quitting their jobs each month, administration critics have often characterized this development as worrisome. Maybe the employee still has child care problems? Maybe covid-19 is still a worry? Might this cause inflation? In fact, this mass resignation may be a positive development — and a sign the economy is tilting in workers’ favor.

The Post reports: “Some 4.3 million Americans quit or changed jobs in January, edging down a bit compared to December but still in record-high territory in yet another sign that workers continue to have the upper hand in a tight labor market.” That came in the same month that the economy added 481,000 jobs. If a flexible job market is one sign of a healthy economy, then ours is certainly robust.

People don’t seem to be quitting because they don’t have child care or fear covid. (Although both are lesser factors.) A Pew Research Center poll finds that “low pay, a lack of opportunities for advancement and feeling disrespected at work are the top reasons Americans quit their jobs last year.” Pew goes on to note that “those who quit and are now employed elsewhere are more likely than not to say their current job has better pay, more opportunities for advancement and more work-life balance and flexibility.”

This is exactly what we want for workers: opportunity for a better life, however they define it. Brookings Institution experts Robert Maxim, Mark Muro and Yang You wrote in January, “For the first time in over two decades, a reallocation shock is not only advancing aggregate economic growth, but is so far benefiting many rank-and-file workers as well.”

Ideally, there should be as little friction as possible in changing jobs. And that’s what we are seeing. “A majority of those who quit a job in 2021 and are not retired say they are now employed, either full-time (55%) or part-time (23%),” Pew reports. “Of those, 61% say it was at least somewhat easy for them to find their current job, with 33% saying it was very easy.”

This past October, I argued that widespread unease over the high rate of quitting and proposed responses to “solve” a perceived problem — the right hollering that “unemployment benefits are too high!” — was misguided unless we knew why employees were quitting. We’re beginning to get the answer — and it’s not cause for worry nor for justification of major readjustments in the economy. Employees weren’t quitting to sit on the couch and watch soap operas; they were getting better jobs.

The data leaves us with a couple of takeaways. First, covid was a tragedy, but also caused people to reevaluate their lives and jobs. After being home with kids, a job with more flexible hours seemed much more attractive. Time away from a job where they felt “disrespected” and the chance to look for a job means employees have learned they don’t have to put up with abusive bosses. Having made changes in their lives and found better employment, employees may be in a better position going forward to demand pay increases, improved benefits and better work environments.

Second, the flurry of union organizing campaign may also be a byproduct of the covid recession and recovery. Unions have grown in popularity, according to Gallup (up to 68 percent approval in 2021 — higher than at any time since 1965). The covid shock, in other words, forced some “creative destruction” as the Brookings authors put it, in labor-management relations. The Biden administration is seeking to build on these gains with the Protecting the Right to Organize (PRO) Act, which would make it easier to organize and ban certain employer anti-union practices.

In sum, President Biden may not have passed the Build Back Better plan but the economy looks better in many respects for a substantial segment of the workforce. As we seek to create domestic supply chains, begin spending on the massive infrastructure bill and beef up domestic production (e.g., semiconductor) workers may have the chance to lock in these already significant gains. Even without BBB, Biden may succeed in building the economy from the “bottom up and the middle out.”