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The Great Renegotiation: Millions of Employees Leaving Old Jobs for Better Ones

The “great resignation”, as they call the tens of millions of Americans who quit their jobs. Yet the biggest and best news is the sheer number of people hired.

Certainly, Americans have said “I quit” in record numbers. Nearly 57 million people left their jobs – many more than once – in the 14-month period from January 2021 to February 2022. That’s a 25% spike from a similar period before the pandemic.

Yet the overwhelming majority of those who quit had other jobs lined up or quickly found work elsewhere.

Nearly 89 million people have been hired in the past 14 months, according to government data, reflecting a record number of job vacancies and a voracious hunger for workers. There are almost two open jobs for every unemployed person in America.

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“People don’t quit to sit on the sidelines. They quit to take up another job.


—Robert Frick, Federal Naval Credit Union

“People don’t quit to sit on the sidelines,” said business economist Robert Frick of Navy Federal Credit Union in northern Virginia. “They quit to take another job.”

Increase in hiring

The wave of hiring began more than a year ago. The United States created 431,000 new jobs in March, the government said last week, extending a string of strong job gains dating back to early 2021.

The unemployment rate also fell to 3.6% last month – just a tick above a 53-year low – from nearly 15% just two years ago.

All of the hires took place amid high covid cases and the reluctance of millions of former employees to return to the workforce. Hiring could have happened even faster, economists say, if the pandemic had died down and the government’s generous unemployment benefits had been cut sooner.

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Nonetheless, the economy is on track to recover the 22.4 million jobs lost at the start of the pandemic by early summer. And then start adding even more.

“In hindsight, I wouldn’t choose the term ‘The Great Resignation’. “It’s too negative,” said senior economist Daniel Zhao of labor research firm Glassdoor. look for work and find work.”

Zhao didn’t coin the term, of course, but it has gained popularity in the media as a way to explain what’s going on in the job market. But that paints an incomplete picture at best, economists say.

“I’ve always called ‘The Great Resignation’ a major misnomer,” said EY-Parthenon chief economist Gregory Daco. “We are in ‘The Great Renegotiation.’ People quit for better conditions, better pay and more flexibility.

“I have always called ‘The Great Resignation’ a major misnomer. We are in ‘The Great Renegotiation’.


— Gregory Daco, EY-Parthenon

Nick Bunker, director of research at job search site Indeed, agrees.

“Resigning has this negative connotation,” he said. “It’s more of a ‘Great Job Hop.’ “

Wage increase

A higher salary tells part of the story. Hourly wages began to rise at the start of the economic recovery – long before inflation spiked – and they have risen at the fastest pace since the early 1980s. Wages jumped 5.6% during of the last year.

In contrast, wages grew by an average of only 2.3% per year in the decade before the pandemic.

Job changers fare the best. A study of 5,000 workers by tax consultancy Grant Thornton found that 40% changed jobs after getting pay rises of 10% or more.

The willingness of companies to offer more flexible modalities such as remote work also reflects the reality of the current job market, which is likely to survive in a post-pandemic period. Many employees, for example, want to be able to work from home part of the time.

“One thing that’s relatively new to the job market is remote work or flexible working,” Bunker said. “There are people who appreciate that very much.”

What all the streams in the labor market point to is that employees are having leverage over employers for the first time in decades. And they take advantage of it.

“Now that employees are looking for talent, there are more opportunities to move from one job to another,” said Daco, who is one of millions of people who have changed jobs in the past. year.

He quit his old job several months ago, Daco said, mainly for a new challenge and the chance to do something different.

Change career

The same goes for millions of other Americans. Many people have left industries in which direct contact with customers is necessary, for example, and moved on to jobs that are less visible to the public.

Fear of COVID was the main reason at first, but the combination of the pandemic and the tight job market has caused people to reevaluate their careers, analysts say.

Think of leisure and hospitality.

The biggest job losses early in the pandemic were in restaurants, hotels, theaters and others that host large crowds. Even now, employment in the sector is still 1.8 million below its all-time high of nearly 17 million.

Where have these workers gone? Many found themselves in transportation or professional jobs with little direct exposure to the public.

The number of people employed by transportation and warehousing companies — think of UPS UPS,
-0.26%
or Amazon AMZN,
-0.20%
– rose to 6.4 million from 5.8 million before the pandemic. Job gains were even greater in white-collar companies.

“It’s not just about replacing jobs that have been lost during the pandemic,” Zhao said, pointing to the rise in transport employment. “It is clear that new jobs are being created.”

How long can you keep quitting and changing jobs?

As long as the economy is expanding, the labor market remains tight and businesses must compete aggressively to attract workers.

“If we say the big resignation is the result of a boiling job market, we should expect many resignations to continue as long as job vacancies are high.”


—Daniel Zhao, Glassdoor

“If we say that the big resignation is the result of the boiling job market, we should expect many resignations to continue as long as job offers are high,” Zhao said.

workers power

What is less clear is how long the wage hike will last.

On the one hand, it is expected that more people will return to the labor market and ease the upward pressure on wages. Businesses are also investing more in automation, either as a substitute for labor or to make workers more productive.

However, don’t expect wage growth to slow back to pre-crisis levels. Not with such a tight labor market and US inflation at its highest level in 40 years. Workers are likely to keep asking for more money.

“From an employers’ perspective, this is very disappointing,” Frick said. “From an employee perspective, it’s great. They have more power.

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