What the Media Gets Wrong About the “Great Resignation”
Who are you? Really?
Tens of millions of people across the country have been forced to ponder that question for the past 16 months.
And the impacts of their answers are creating ripples across our economy… and the markets.
But is this a tide that’s going to lift all boats, or is it a tidal wave threatening to drag everyone down to the bottom?
Personally, I think it’s neither.
The “Great Resignation”
There are essentially two overarching goals we all have in life: to achieve happiness and to have a sense of meaning.
We can pull out Maslow’s hierarchy of needs. But, really, it all boils down to being fulfilled and satisfied. And many people have realized over the past year that they’re neither of these things… at least not professionally.
And that’s ignited an exodus.
In 2021, the “quits rate” has rapidly bubbled higher.
That’s despite the fact that more than 9.3 million people are still out of work.
And in the 20 years since the U.S. Bureau of Labor Statistics started collecting this data, there’s never been anything like this. Even more shocking, the number of people leaving their jobs now is 24% higher than it was before the pandemic.
The naysayers are donning their sandwich board signs and proclaiming, “The end is nigh!”
The advocates are hailing this movement as righteous and an example of the true power of the worker.
And the press was quick to plaster it with a catchy name: the “Great Resignation.”
But let’s do a reality check…
The Great Resignation is merely a continuation of a trend that’s been in place for well over a decade.
In fact, in January 2020 – a little less than two months before the proverbial manure flew into the jet turbine and the world became a mess – the lament was this: Workers are quitting their jobs at the fastest rate on record!
In 2019, Americans were saying “sayonara” to their employers for greener pastures and better pay at the highest rate ever.
And we can see in the chart above that ever since the bottom of the financial crisis in March 2009, the quits rate has steadily been on the rise to record levels.
The trend was merely paused during the pandemic.
The crisis is subsiding, and that pent-up motivation to leave is bouncing the quits rate back to its normal range. In fact, the quits rate is almost exactly where it was predicted to be.
Corporate America Ups the Ante
After each recession, turnover rates surge.
Part of it is because of self-reflection during the crisis: Is this who I really want to be?
Part of it is because of pay.
Here’s the rub for the unfulfilled worker… Companies will gladly shell out 15% more for new talent. But those same companies tend to give current employees raises of only 2% to 3%.
If you were in that situation, which option would you take?
Now there is a record number of job openings. And many of these have been slow to fill.
And in May, Chipotle Mexican Grill (NYSE: CMG) raised its minimum wage to $15.
In the apparel sector, Under Armour (NYSE: UAA) followed suit by raising the minimum wage for its 8,000 hourly employees to $15.
These aren’t signs of the end or that the sky is falling. These are ongoing – and encouraging – signs that the economy is returning to normal. So expect that quits rate to continue to hit new highs.
But remember, it’s merely a continuation of a trend that began more than a decade ago.
Here’s to high returns,
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