Tens of millions of Americans have changed jobs in the last two years. The wave of retirements helped to reflect and create a rare moment in the workforce as employees demanded higher wages and employers were understaffed. they.
But the so-called “great resignation” appears to be coming to an end. The rate of workers leaving their jobs voluntarily has dropped sharply in recent months, ended in may — and only slightly above levels before the pandemic roiled the U.S. labor market. Some industries with the highest turnover rates, such as hospitality and retail, have returned to pre-pandemic levels.
Now the question is whether the gains made by workers during the Great Resignation will outlive the moment, or whether employers will be forced to pay for it, especially if the economy slips into recession sometime next year, as many forecasters predict. will regain its influence.
The pendulum may already be swinging back toward employers. With job turnover peaking in late 2021 and early 2022, wage growth has slowed, especially in low-wage service sectors. Employers still complain about labor shortages, but report that it has become easier to hire and retain workers. And, according to data from payroll firm ADP, those who do change jobs are missing out on the big raises that have become the norm in recent years.
“You don’t see the $1,000 down payment sign any more,” said ADP chief economist Nella Richardson.
Richardson likened the labor market to a game of musical chairs, and as the economy began to recover from the pandemic-induced shutdown, workers were free to move between jobs. But amid the warnings of a recession, they are getting less work and nervous about being caught out of work.
“We all know the music will stop soon,” Richardson said. “Then people will stay a little longer.”
About a year and a half ago, Aubrey Moya joined a large-scale resignation after deciding she was fed up with low wages and hard work at waiting tables. Her husband, a welder, was earning a good income, and he was also changing jobs for a better salary, so they decided it was time for her to start the photography job she had long dreamed of. Moya, 38, became one of millions of Americans to start small businesses during the pandemic.
But now Moya is questioning whether her dream is sustainable. Her husband’s income has fallen and her cost of living has risen. Her inflation-plagued clients aren’t willing to splurge on her boudoir photography, which she specializes in. She’s not comfortable paying for her Fort Worth studio.
“I had an empowering moment,” she said. “There was a moment when I was like, ‘I’m not going back, I’m not going to put up with it any longer,’ but the truth is, I am, because how else am I going to pay my bills?”
But Moya has no intention of returning to the waiting table just yet. And some economists believe workers are likely to keep some of the profits they’ve made in recent years.
“There is good reason to believe that at least some of the changes we have seen in the low-wage labor market will be long-lasting,” said Alindrajit Dube, a professor at the University of Massachusetts who has studied pandemic economics.
Mass retirements are often portrayed as people leaving their jobs altogether, but the data tell a different story. Most of them quit to find other, higher-paying jobs or, like Moya, to start their own business. And while turnover increased in virtually every industry, it was concentrated in low-wage service industries, where workers generally had little influence.
For those workers, the rapid reopening of the face-to-face economy in 2021 presents a rare opportunity. Restaurants, hotels and shops needed tens of thousands of employees at a time when many still shunned jobs that required face-to-face interaction with the public. And demand for workers continued to outstrip supply, partly because many who left the service industry were reluctant to return, even as coronavirus concerns faded.
As a result, wages for workers at the bottom of the income ladder skyrocketed. Average hourly wages for regular restaurant and hotel workers increased by 28% from the end of 2020 to the end of 2022, far outpacing inflation and overall wage growth.
and recent papersDube and two co-authors found that the income gap between workers at the highest and lowest income levels began to narrow after widening for 40 years: just two years. In the economy recovered by about a quarter, they found much of the progress was due to workers’ increased ability and willingness to change jobs.
Wages for low-wage workers aren’t rising any faster than other groups. But what’s important in Dubet’s view is that low-wage workers haven’t lost ground over the past two years, with inflation and wage growth nearly catching up with higher-income earners. This is because the turnover rate is declining not only because workers are becoming more cautious, but also because employers desperately need to raise salaries and improve conditions to keep workers from leaving. suggests that it may be
Los Angeles restaurant waiter Danny Kron has changed jobs twice since returning to work after pandemic restrictions were lifted. He first started working at a dive bar, where the hours were “harsh” and his most lucrative shifts were assigned to the clerks who sold the most margaritas. He quit to work at a large chain restaurant. The restaurant had good working hours but little flexibility in the schedule, which was a problem for the aspiring actor.
So last year, the 28-year-old Kron quit again to take a job at the high-end sushi restaurant Blue Ribbon. That’s where he earns more and the actors’ schedules are more flexible. A strong labor market after the pandemic has given him the confidence to keep changing jobs until he finds a job that suits him, he said.
“Knowing I had a lot of other work to do, I was less obsessed with one task out of necessity,” Kron wrote in an email.
But now that he has a job he loves, he says he has little desire to keep looking. Partly because he feels the labor market has softened, but mostly because he’s happy where he is.
“Finding a new job is hard work and training for a new job is hard work,” he said. “So if you find a good customer service job, don’t give up on it.”
The labor market remains strong, with the unemployment rate below 4% and job growth continuing, albeit slower than in 2021 and 2022. But even optimists like Dubet admit that workers like Kron could lose their influence if companies start cutting jobs en masse.
“It’s very nuanced,” says Kathryn Ann Edwards, a labor economist and policy consultant. studied the role of retirement in wage growth. He said the recession could wipe out the gains made by hourly workers over the past few years.
Still, some employees say there have been more lasting changes. it is our action. Praised as “essential workers” in the early days of the pandemic, with benefits like bonuses and sick leave, many people in hospitality, retail and other similar jobs will be out of the emergency. He said he was disappointed to see companies slash benefits over time. They said their big resignation was partly a reaction to the experience, saying they no longer wanted to work for a company that didn’t value them.
Amanda Sheeler, who owns a store near Hickory, North Carolina, said her boss recently told her she would find more ways to accommodate hourly workers because they were leaving to find work elsewhere. He said he was told he needed it. she replied: “So do I.”
“If I don’t feel supported, that you don’t take my concerns seriously, and you keep throwing up at me, I might do the same. ‘ she said. Sheeler, 40, said. “You no longer have loyalty to the company because the company has no loyalty to you.”
