In what has been dubbed “the great resignation”, some 4.3 million Americans in August quit their jobs. The high number of resignations surpass the record set in April where about 4 million people resigned from their position.
The figure seen in August represents about 2.9 percent of America’s workforce—and is an increase of 242,000 from July. 892,000 workers in the foodservice and accommodation industries resigned, while 721,000 retail workers quit an additional 534,000 health care and social assistance workers left their jobs.
The record high resignation numbers are a result of a combination of several factors: greater job prospects in coming months, unfulfilling jobs, poor pay or generally a poor working environment. Though the Covid-19 has affected the labor dynamics, some believe that it too has given people an opportunity to reassess their jobs—with some seeking a more purposeful career.
“We were all able to take a step back in the last year and spend more time doing other things and really question the value of what we’re doing at work,” said Anthony Klotz, a management professor at Texas A&M University. “A number have made the decision, ‘I need to make a change.’”
Resignations have historically been associated with the level of confidence that workers have in finding employment elsewhere. In fact, more than a half of workers surveyed in the Bankrate’s August Job survey said that they planned to find a new job in the coming new year—with 56 percent of the respondents saying that they would prioritize adjustable working hours and remote work.
However, these changes in the labor market and their economic implications have made the market unpredictable with many businesses saying that they are having trouble with retaining and finding qualified employees. Some businesses are having to increase their employee’s salaries to retain them.
On the other hand, some of the resignations may have been a result of health concerns and childcare issues brought on by the pandemic.
The impact of the mass resignation in August is being felt more in some states than others. More than 4 percent of workers in Georgia, Idaho and Kentucky voluntarily left their jobs in August—that being the highest rate in the country. Kentucky specifically had the highest resignation rate of 4.5 percent.
Coincidentally, or maybe not, the three states have among the lowest national minimum wage. Reports have shown that states that offer the federally mandated minimum wage or something higher, have lower resignation rates.
Pennsylvania was expected to have the least resignation rates. As reported by the U.S. Department of Labor, at least 120,000 Pennsylvanians quit their jobs in August—that is about 2.1 percent of the state’s workforce.
But in a rather bizarre turn of events, job openings in the U.S.A dropped sharply in August. With employment vacancies falling to 10.44 million, a drop of 659,000 compared to July which had 11.1 million job openings, according to the department’s Job Openings and Labor Turnover Survey. Additionally, the job posting rate fell to 6.6. percent in August from July’s 7 percent. The government hires also fell during the month, down to 1.4 percent in August from 2.2 percent in July.
While Covid-19 may be blamed for job losses and is cited by some as the primary reason for quitting, economists say the strengthening economy may also have something to do with the labor shortage.
“There is an enormous labor shortage in the country right now and it is not just because people are quitting or have childcare problems or can’t get to work due to the Delta variant,” wrote Chris Rupkey, chief economist at Fwdbonds. “The economy is strong as a bull, that is why there is a tremendous demand for labor.”
The Federal Reserve will wait until the labor market stabilizes before implementing any interest rate adjustments. Additionally, workers that lost their jobs during the pandemic may need to retrain or improve their skillsets—the labor market is looking for qualified and skilled workers.