The Great Resignation is not real.
If you keep current on business news, you may have heard of the breaking headline that US employees are “leaving the workforce or switching jobs in droves.”(a sensational headline directly from the BBC). The Bureau of Labor Statistics (BLS) reported that total workplace resignations reached a record high at 3.9 million in June 2021. This number reflects the number of employees who voluntarily quit their job for any reason.
Popular media sources claim that dissatisfaction in the workforce as the cause for the record statistic , but is that really what the data indicates? I find the sources for these headlines indicate no such thing-- employees are not quitting their jobs for other pursuits, but rather the job market is outgrowing its supply of labor.
Here, I will break down how the trending tag #TheGreatResignation is misleading, where it is in the right, and how it is more relevant than ever in the contemporary workplace.
The Truth About our Labor Market
The headlines used for #TheGreatResignation are exaggerated-- the raw numbers themselves may be record-breaking (since 2019 at least), but despite how many zeroes 3.9 million has, the number is not as mind-boggling as it seems. In the same release by the BLS, the number of job openings ALSO reached a record-breaking high in the same month (a record 10 million). To give these numbers context of the overall job market, the US job growth rose 6.5% but turnover rate rose 3.8%, and resignations-only rate had reached 2.6%. Even though the resignation rate is the highest recorded so far, the overall turnover has hardly deviated from it’s average.
Interestingly, comparing job growth and turnover also shows that despite the economic volatility of job growth, turnover has been really consistent over the last 5,10, even 20 years-- all the way back to when BLS started recording turnover numbers. (via BLS Data Tool)
Of course, even though these numbers show the labor market is business as usual, this information was not presented in a vacuum. If there is no issue, then why is there a severe worker shortage, and why is employee recruitment and retention more difficult than ever?
Going back to the source for all of these data (the BLS), you can find other metrics that can give a broader perspective on what might be happening with employment.
According to these graphs, unemployment has bounced back incredibly quickly post-covid, especially when compared to unemployment after the 2008 crisis, but what is also shown is that the workforce has not kept pace with job growth either; despite more people entering the job market, there has not been enough labor growth to match demand. People aren’t leaving in droves, rather the turnover graph shown above indicates quite the opposite-- the majority of people not returning to employers were laid off during the pandemic, not quit, and resignations dropped at the same time before returning to 2019 levels.
Where is #TheGreatResignation correct?
With the truth in hand, we have reached the root topic of what #TheGreatResignation is all about: If there are more jobs than workers, then whose jobs will the workforce be filling? Microsoft, the source of the cited survey data, had released an insightful report on work trends and how employers can stay vigilant in keeping their talent in-house. One of the takeaway statistics from the report and heralded by #theGreatResignation was that
“41% of employees are considering leaving their current employer this year.”
To which I’d like to challenge: if so many employees say they would leave their jobs within this short timeframe, but the national turnover rate is still well below 5%, then where is the disconnect?
The inference by the media is that everyone is leaving their positions because many aspects of the job are terrible, but Microsoft’s report and others like it address why people leave their jobs when they do, rather than only focusing on why. So then, when are employees leaving their jobs?
The short answer is when employers provide little value over a paycheck.
The long answer is:
Lack of training programs
No promotions and Inadequate benefits
Culture
No job security
The longer answer (NOT from the Microsoft report) is that in 2021 most US businesses still would rather hire talent from outside the organization instead of running a training program. (check out this great article from Wharton University about this catch-22), leaving a unique market failure where employers ‘cant find labor’ despite having a pool of people looking for work. The lack of skills training is a symptom that has its own consequences-- because organizations would prefer to fill vacancies externally, the likelihood of employee promotions are diminished or impossible, as employees ‘lack the skills required’ for such a promotion. This means that, when an employee wants to seek career advancement or better compensation, their only option is to look elsewhere. Employee loyalty may be dead in 2021, but it’s because employers killed it to save a dollar.
This narrative, though depressing, has a silver lining-- employees who do switch jobs for better compensation have an understanding with their employers: the relationship is purely transactional. Employers get the work they pay justly for, and the employee gets the career advancement they desire; it is a symbiosis, and the employees are rewarded for it in higher pay and benefits.
What can we do about it?
If you are considering writing a resignation letter just because of the headlines, pump the brakes! Most people who resign from jobs usually do it because they already have an offer for a better job. If this is you, then congrats on your career advancement! We offer career and executive coaching services to help you onboard better. If you believe you lack the skills to get the career you want, community colleges offer affordable certifications and technical courses that you might be looking for. Some States and Areas also have workforce development programs you can enroll into, some of which even offer apprenticeships when completed.
Employers have all the tools in the toolchest to address #TheGreatResignation, actually. The best and quickest way to mitigate losing talented workers is to provide them with the compensation they want. Don’t guess, ask-- It may not cost much to provide, like 15 minute breaks, a quieter workspace, or remote work. Even then, mitigating the effects of turnover is the best remedy. One big mitigator is to not betray employees’ job security, even if they are not a core employee (see this Forbes article about how terminations affect everyone). Succession planning, having training programs, and onboarding new-hires are all also essential in running a sustainable business model.
Here are some takeaway questions. Share your thoughts in the comments!
Do you think this #TheGreatResignation is a big deal?
What else can companies do to keep their talent?
Do you believe there should be employee loyalty in 2021?
