Implications of 2021’s “Great Resignation”

In 2021, the United States faced what is being called the “Great Resignation.” Weforum.org describes it simply as “a phenomenon that describes record numbers of people leaving their jobs after the COVID-19 pandemic ends.”¹ With the record number of people leaving their jobs, there is a record number of open positions across the United States. No matter where you go, odds are there is a “Help Wanted” ad in the window – some with large sign-on bonuses as well. Nevertheless, many people decided that rather than returning to work and returning to “normal,” it would be a good time to retire or change careers.

In this article, we discuss why the resignation occurred and who primarily was a part of it, how the resignation affected the workplace, and what we can expect for the rest of 2022.

Why Did the “Great Resignation” Occur?

When COVID-19 forced everyone to stay home that was not considered an essential worker, lives were drastically changed. People that were used to commuting to work, going out for lunch, dressing up in professional business attire, and getting stuck in rush hour traffic after work every day, were now transitioning to the work-from-home lifestyle. Even if the transition was choppy at first, they grew accustomed to being home with their families and not spending time and gas driving to and from work.

This caused many workers to reconsider their career goals and their idea of work-life balance. SIU professor, Steven Karau has been studying the “Great Resignation.” He says, “Since the year 2000, there had never been more than 2.4 million people resigning or quitting their jobs in a month. But since May 2021, the numbers have just been going up and up, reaching the highest total in November 2021, when 4.5 million people left their jobs voluntarily. That represented 3% of the workforce and 3.4% of the private sector workforce, leaving 10.5 million job openings in the United States.”²

Some of the primary reasons people left their jobs were:

They were burned out
They felt they worked effectively remotely and sought out jobs where they could continue to do so
They evaluated their priorities and wanted more experiences with their families
They wanted the freedom to live where they want
They wanted higher salaries
They felt that their responsibilities had increased
Their employer required vaccinations and they refused

The majority of industries affected by the “Great Resignation” were industries that required employees to be on-location and work set hours. This included “dine-in restaurants, ship cruises, sporting events, music concerts, passenger airlines, etc.”³ This also includes health care workers at hospitals and nursing homes. There have been horror stories of elderly people waiting several hours for a nurse to help them use the bathroom because the healthcare locations are so severely understaffed. This set off a trickle-down effect as more people quit, those who remained felt the implications the most.

How the Resignation Affected the Workplace

As more people resigned and decided not to return to their pre-pandemic workplace, those who did were arguably affected the most. According to the article from SIU, “‘It’s a vicious cycle,’ Karau said. ‘As the quit rates increase, the remaining overworked employees resent having to work even harder to handle the workload.”’² Eventually, many of those that remained felt burnt out, underappreciated, and underpaid and inevitably followed their coworkers’ steps.

Additionally, many places are offering incentives for new workers. The current overworked employees will understandably be resentful if the new workers get a sign-on bonus or higher wages from the start. This means that to keep the current employees happy, the employer needs to give them raises and bonuses to save them from joining the statistic.

What Changes We Can Expect

Clearly, things will have to change if these understaffed businesses want to stop the bleeding. Karau said, “It does create an opportunity for businesses that are willing to be progressive and flexible to create a more transformative and rewarding employment experience that is mutually beneficial for the employee and the company.”² The old ways of doing business may be behind us.

This is why NPR has coined the “Great Resignation” as the “Great Negotiation.”⁴ The majority of people leaving their jobs are not retiring. They are just no longer interested in working in the same conditions they were pre-pandemic. The workers have the opportunity to make the decisions and negotiate since there is a shortage of workers. Therefore, workers are applying to other positions or companies and negotiating for higher wages, better working conditions, and more flexibility.

In addition, more types of work-from-home, service-based jobs have entered the scene. “What we now see is that businesses that offer their products or services independent of time and location, like streaming services, online retailers, remote work service providers, and other multisided platforms are where talent is moving to given their potential and their successful emergence from the pandemic.”¹

A Negative Implication of the Great Resignation

With an increased number of people quitting, this has led to a tighter labor market which gradually has led to record levels of US wage growth. Some may argue that this is a contributor to inflation, more specifically wage-push inflation.

According to thebalance.com, “wage-push inflation is the general increase in prices caused by wages rising in society.”⁵ As companies increase their wages, they, in turn, have to increase the cost of goods in order to continue making a profit. The cost of goods then goes up and the employees need higher wages in order to pay to live. This creates an endless circle of higher wages and higher costs of goods which is then called wage-push inflation.

In conclusion, the workforce is shifting. As we have emerged from the pandemic, people have reevaluated what is important to them and don’t intend to go back to the old ways. Those who have to go to a location to work will have to be paid more in order to keep them around. The others will find flexibility and freedom while working remotely. It’s an uncomfortable position for many businesses, but discomfort is where we grow. As long as employees are treated fairly and given more of a voice, we can hope that a new balance will be found in the American workforce.

Releasing in May 2022, Deaths Red Tape is a new technical guide by Mark Colgan on the logistics people have to contend with after they lose a loved one. Follow Mark’s Amazon page here to be notified when it’s released and see the other books in his collection.