The data is starting to support the hype about The Great Resignation.
Don’t be too awed by media reports of “record-breaking” resignations. Record-breaking quit rates were entirely predictable based on their upward trajectory over the last 10 years. What changed was a steep drop in those rates early in the pandemic. Data released today (November 12, 2021) shows a rate (indeed, record-breaking) of 3.0% for September and, yes, this trend looks to be ramping up.
Until now, we’ve known only that there’s been a Great Compression of Resignations — an inordinate amount of resignations in a short period of time. It’s a distinction of little consequence to employers, as they still have the operational hardship of a surge in people heading for the door, regardless of whether it’s a new trend or simply a snapback following the unexpected freefall of resignations that occurred at the outset of the pandemic.
The US Bureau of Labor Statistics (BLS) chart, below, shows that, if we looked at only the last 10 years, almost every year had record-breaking resignations. We might reasonably conclude that a Great Resignation started in 2009, hit a snag in 2020, and has now resumed.
Whether we’re seeing something new or a resumption of a decade-long trend, the inevitable question is “Why are workers quitting?”
Before we speculate, it’s worth understanding the data that Great Resignation declarations are based on. According to BLS:
Quits…are voluntary separations initiated by the employee…. The number of quits typically rises when the economy expands and declines when the economy contracts. Quits can show employee confidence in the labor market. Employees tend to quit their jobs more frequently when they are confident they can find another one.
The quit rate, monthly resignations as a percent of total employment, includes workers who go to another job or leave the workforce. It doesn’t include retirements, transfers, labor strikes, or those who go out on disability leave.
The monthly data is based on BLS’s Job Openings and Labor Turnover (JOLTS) survey, which includes a random sample of 20,700 nonfarm business and government employers. Learn more about JOLTS methodology.
In September (the most recent data) the quit rate went down in the Northeast and Midwest and increased in the South and, most substantially (from 2.7% to 3.1%), in the West. Read the news release with September’s data.
The quit rate alone doesn’t tell us why people leave their jobs. In our COVID-era, we can’t make assumptions about workers getting fed up with, say, a lack of work-life balance versus people who have found better job opportunities. Eventually, we can get some insight into this by analyzing other data, including “labor churn,” the number of all hires plus the number of all separations (including quits). I don’t consider this a do-it-yourself analysis, and BLS isn’t t likely to publish it until mid-2022.
Quantitative Blind Spot?
There’s a ton of data about employment. With the unemployment rate (4.6%) still higher than it was pre-pandemic, job openings at a blistering 20-year high (see chart, below), and accelerating quit rates — all in an economy threatened by inflation and shocked by supply-chain chaos — the moving parts are mind-boggling.
Personally, I aspire to hold my intuition (never reliable!), biases, and wishes in check, and will keep my eyes on the data — complemented by my observations of what people and businesses are really doing.
I’m no economist, but when I examine the numbers, they don’t add up. Elevated unemployment, desperate employers, inflation, and a Great-ish Resignation? There must be a quantitative blind spot — a variable left uncalculated. We should resist the urge to ease our uncertainty by letting ourselves get swept away by hype.
Whether resignations are “Great”… or just compressed… I continue to encourage organizations to be the best employer possible, because in the calculus of organizational effectiveness leading to better business results… employee wellbeing — a result of properly designed work in safe environments — remains the constant.