Why We Are in the Middle of the Great Resignation

Georgia, Kentucky, and Idaho have had the highest quit rates:

https://www.bls.gov/charts/state-job-openings-and-labor-turnover/state-quits-rates.htm

Through JOLT numbers, we can look more closely at Job Openings and Labor Turnover.

Labor Turnover

People are leaving their jobs at historic highs. At 2.9 percent of the workforce during August, we are looking at 4.3 million individuals. It makes sense though that job openings fall during a recession and then rise during the recovery as businesses expand.

Followed by an expansion, our most recent recession was April, 2020:

https://www.washingtonpost.com/business/2021/10/12/jolts-workers-quitting-august-pandemic/

Thinking about labor turnover takes us to jobs that people dislike. During a contraction, our optimism evaporates. If you were working, you stayed there. However in a healthy economy we are more willing to leave a distasteful job because an alternative is probably available.

Now, with job openings soaring, workers feel comfortable quitting:

https://www.bls.gov/charts/state-job-openings-and-labor-turnover/state-job-openings-rates.htm#

Some reasons for the high quit rate relate to the pandemic. Working from home, we discovered how nice it was not to commute. Some women though remained home because their child care responsibilities required them to quit. Finally, for baby boomers, the pandemic could have given them the nudge they needed toward retirement.

At the same time, with wages rising, workers are looking for higher pay. They also could just want a job that they like better, especially when people employed in the service sector report an ascending number of insults from customers. Below, you can see that the voluntary quit rates are highest for restaurants, bars, and hotels, with retail trade close behind:

https://www.washingtonpost.com/business/2021/10/12/jolts-workers-quitting-august-pandemic/

Our Bottom Line: The Unemployment Rate

The unemployment numbers have been on somewhat of a roller coaster. After the Great Recession ended in June, 2009, unemployment hit a high of 10 percent in October and then steadily descended down to 3.5 percent in January 2020. Then, when more than 20 million workers lost jobs, April 2020 peaked at a 14.8 percent jobless rate:

https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

But the employment numbers can be misleading. The labor force includes the people, 16 and older, who have a paying job and those who do not but are looking for one. To calculate unemployment, we just create a fraction. The number of unemployed (7.7 million) in the workforce is divided by the entire workforce (161.35 million). Because of how it is calculated, the unemployment rate excludes some who do not work like “discouraged workers.”

In addition, if quitters are not doing a job hunt, the unemployment rate excludes them.

My sources and more: Ed Yardeni’s Morning Briefing provided my initial insight about labor turnover. From there, The Washington Post, here and here, had more detail.  However, for a firsthand look, do go to the Beige Book, to this JOLT report from BLS, and to these BLS graphs.