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December 9, 2021

Three Myths of the Great Resignation

What if I told you the Big Quit wasn’t really about “quitting”? The “Great Resignation” remains one of the buzziest economic stories of 2021. But the more people talk about it, the more I wonder whether most people know what they’re talking about. As so often happens with other nifty phrases and neologisms, use of […]

What if I told you the Big Quit wasn’t really about “quitting”?

The “Great Resignation” remains one of the buzziest economic stories of 2021. But the more people talk about it, the more I wonder whether most people know what they’re talking about. As so often happens with other nifty phrases and neologisms, use of the term and abuse of the term are in equal proportion.

Let’s start with what’s true. More Americans left their job in April this year than in any other month on record, according to the Bureau of Labor Statistics’ analysis of what it calls “quits.” Even more people quit in July, setting a new record. We broke that new record again in August. And then again in September. This is what people refer to as the “Great Resignation,” and it is, as I’ve written, getting greater by the month.

Now for what’s not true. Here are three popular myths about the Great Resignation and who is affected by it.

Myth 1: The Great Resignation is about quitting.

One problem with the term Great Resignation is that resignation sounds like a pure subtraction. If I told you, “My company suffered a great resignation last year,” you’d probably think that the company had lost a lot of workers. If I continued, “And the firm grew by 20 percent!” you might be very confused.

But that’s what’s happening in the broader economy. The increase in quits is mostly about low-wage workers switching to better jobs in industries that are raising wages to grab new employees as fast as possible. From the quitter’s perspective, that’s a job hop. The low-wage service-sector economy is experiencing the equivalent of “free agency” in a professional sports league. That makes it more like the Big Switch than the Big Quit.

Let’s zoom in on one sector: the accommodations and food-services industry. Mostly composed of restaurants and hotels, this sector has seen more quits than any other part of the economy. But it’s not bleeding jobs. Quite the opposite: Accommodation and food services added 2 million employees in 2021, more than any other subsector I could identify.

In fact, accommodation and food services, which has been hardest hit by the Great Resignation, has also created one out of every three net new jobs in 2021. Does that make any sense? Only if you think about this as a job-switching revolution.

Myth 2: The Great Resignation is about white-collar burnout.

Although burnout has remained steady or declined for most workers during the pandemic, according to Gallup polling, remote workers are significantly more likely to say they’re burned out now compared with before the pandemic. Because remote workers are a very white-collar group, this fact has led to a great deal of news coverage claiming that the Great Resignation—or whatever!—is being driven by white-collar professionals.

But quits aren’t rising much in finance, real estate, or the broad information sector, which includes publishing, software, and internet companies. This year, quits for leisure and hospitality workers have increased four times faster than for the largest white-collar sector, which is professional and business services.

I’m not saying “Stop talking about burnout; it’s just for rich people.” I’m suggesting that we shouldn’t conflate white-collar burnout with whatever’s driving lower-wage service workers to hop around. Given the government statistics and private survey data we currently have, these just seem like different phenomena. Strange as it sounds, the increase in self-reported burnout is happening in industries where workers are less likely to quit.

Myth 3: The Great Resignation is a 2021 phenomenon.

The term Great Resignation was likely coined by Anthony Klotz, a professor at Texas A&M, in May; at the time, he framed a mass exodus from the workforce as a predictionfor this year. But since the bottom fell out of the economy in April 2020, the labor-force participation rate has increased for most groups—men and women, white and nonwhite. The biggest exception is older Americans, who by and large quit their jobs (and stayed quit) last year.

For Americans over 65 without a disability, the participation rate is still down more than 10 percent since before the pandemic. This suggests that roughly one in 10 seniors left the labor force before we might have expected and didn’t come back. (Not surprising, because the pandemic poses a much higher risk of severe illness to older people.)

The great majority of this economy’s “quitters,” in the permanent sense of the word, are seniors. But they quit a while ago, and calling their decisions “resignations”is sort of weird. When a 70-year-old leaves a business she’s worked at for three decades, we don’t throw her a big resignation party. We throw her a retirement party. The pandemic economy—with its health risk of in-person work for the elderly, its economic shocks, and maybe even its rise in asset prices and savings rates—has produced a large number of early retirees.

The Great Resignation isn’t really about burnout. And it’s not really about what most people think of as resignations. To put it as concisely as possible: The Great Resignation is mostly a dynamic “free agency” period for low-income workers switching jobs to make more money, plus a moderate surge of early retirements in a pandemic.

Article written by:  Orville Lynch, Jr.
Mr. Lynch, a member of the legendary two-time Ohio Civil Rights Hall of Fame Award winning Lynch Family. Mr. Lynch is a nationally recognized urban media executive with over 20+ years of diversity recruitment and serial entrepreneur with numerous multi-million dollar exits.
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