The Great Resignation warrants further explanation

In November 2021, the seasonally adjusted quit rate reached a record of 3.0 percent, a significant increase from the previous highest rate of 2.4 percent. This phenomenon of rising quit rates is currently referred to as the “Great Resignation.” Investigating the existing data on labor turnover, the historical quit rate data, and the reasons for the rise of quit rates in 2021 are the focus of a recent article from the U.S. Bureau of Labor Statistics Monthly Labor Review.

The quit rate, which is measured by the U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS), is the number of quits during the month as a percent of total employment. The article’s author, Maury Gittleman, a research economist at BLS, explored whether or not the tightening of the labor market (when vacant jobs are plentiful and available workers are scarce) could explain the rise in quit rates in 2021. Gittleman found that during the COVID-19 pandemic, the models were unable to effectively predict or explain the significant rise in quit rates. Even with the current degree of market tightness, the recorded quit rates are higher for the 21st century than expected. Instead of reaching the 3.0 percent quit rate, economic models estimated only reaching levels of about 2.2 percent.

Following these results, Gittleman explored which sectors contributed the most to the rising quit rates. The results showed that the sectors with the highest quit rates were retail trade, professional and business services, accommodation and food services, and healthcare and social assistance. The author notes that this finding is consistent with results from a study by the Pew Research Center, which found that low pay, no advancement opportunities, and feeling disrespected were the most common reasons for quitting. These compensation concerns align with quit rates in the low-paying retail and food services industries.

Comparisons between historical data from 1930 to 1981 when a different survey was used and recent data from JOLTS are challenging due to the different definitions of quits from the two programs. However, using standard errors, researchers have compared quit rates. Estimations suggest that quit rates in the past may have reached similar levels to today. However, it is impossible to assess statistical significance due to a lack of microdata from the LTS program.

Gittleman suggests in the paper that future research should explore other explanations for the rise in quits, and take into account pandemic-related factors such as increased stimulus payments, health concerns, childcare issues, and changing attitudes toward work. Pinpointing whether those who are resigning from their jobs are leaving the labor force or moving to better jobs would also benefit from more research, Gittleman notes.

Review the full article exploring the Great Resignation here.