Americans quit their jobs in record numbers last year as the economy continued to be roiled by the pandemic and the changes it has wrought on where Americans work, live, and how they balance their careers with other pursuits.
But do not be so fast to accept the moniker “the Great Resignation” that some analysts have assigned to this. It might be more accurate to describe 2021 as a return to the pre-pandemic shift of power from employers to workers that saw quits rising and layoffs falling year after year over the past decade.
The Bureau of Labor Statistics monthly report based on its Job Openings and Labor Turnover Survey showed that the number of quits in December edged down to 4.3 million, 161,000 below the record high hit in November. The quits rate, which measures the percentage of the workforce that leaves their job in a given month, was little changed at 2.9 percent.
There were a total of 47.4 million quits in 2021, by far the most on record. And the quits rate averaged 2.7 percent, also a record high and far above the 2.0 average this century.
Now this does not mean that 47.4 million of us quit our jobs last year. At least some of those quits were racked up by workers who quit multiple times.
Perhaps more importantly, the level of quits is not actually above where we would expect it to be without the pandemic. Between 2010 and 2019, the level of quits increased on average 7.3 percent each year, some years higher and some years lower. If that average had held in 2020 and 2021, we would have had 48.5 million quits this year.
In other words, while quits were up last year, they were up by less than the long-term trend line pre-pandemic would indicate. We are just over one million quits short of trend.
That is not to say that employers are not genuinely feeling walloped by the sudden increase in quits. When quits plummeted during the last down turn, it took ten years for them to return to their 2006 peak. Since quits are a measure of worker confidence, that’s a way of saying that the labor market was viewed extremely unfavorable to workers for close to a decade. This turned around much more quickly in the current crisis.
It also helps to look at quits in the context of layoffs and discharges. Quits measure voluntary departures, while layoffs and discharges measure when workers lose their jobs because their position is eliminated or they get fired. Last year, layoffs and discharges were unusually low after exploding higher during the brief pandemic recession.
One way of looking at this as a shift in labor market power. Workers feel more emboldened to quit to find jobs because there are a record number of jobs open–the JOLTS survey shows we had between 10.5 and 11 million or so at the end of every month since last summer–and employers are more constrained than any time in recent memory when it comes to letting workers go.
The total number of separations–which includes quits and layoffs and discharges–was elevated but not extremely so in any given month of last year. This suggests that perhaps when workers are losing their jobs, they start quitting them more frequently. And it also suggests the opposite: when lots of employees are quitting, there’s a lot less of a need to lay off anyone. There appears to be an economic demand for labor turnover.
The economy has gyrated wildly over the past two years, but the notion that the level of quits is something extraordinary runs aground on the fact that quits have been rising for a decade and have not yet even resumed their long-term trend.
Why did so many people quit last year? Because America is slowly getting back to something like normal after the pandemic lockdowns.
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