Why are people quitting their jobs en masse?
I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”
Today's read: 10 minutes.
We're taking a look at The Great Resignation. Plus, an important story about inflation and Biden's agenda, along with a "Have a nice day" story to send you off.
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- The U.S. and China agreed to ease restrictions on foreign journalists following a series of tit-for-tat expulsions and restrictions over the last year. (The compromise)
- The State Department and NASA criticized Russia for an anti-satellite missile test that they say created 1,500 pieces of space debris and caused significant risk to astronauts aboard the International Space Station. (The near miss)
- U.S. retail sales rose 1.7% overall in October, beating economists’ expectations, while major retailers like Walmart, Lowes, Target and Home Depot all posted better than expected earnings. (The numbers)
- The House of Representatives will vote on a resolution to censure Rep. Paul Gosar (R-AZ) and strip him of his committee assignments in response to a tweet he sent of an animated video depicting him killing Rep. Alexandria Ocasio-Cortez (D-NY) and attacking President Biden. (The censure)
- Pfizer has asked the FDA to grant emergency authorization for its experimental Covid-19 antiviral pill that drastically reduces hospitalizations in people with symptomatic infections. (The ask)
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The Great Resignation. On Friday, the U.S. government released its latest Job Openings and Labor Turnover Survey (JOLTS) data, showing an estimated all-time high of 4.4 million workers who quit their jobs in September, up from 4.3 million in August, indicating the pace of employees quitting their jobs is still increasing. The percentage of resignations relative to total employment was 3%, also the highest such figure on record.
The "quits rate" data came along with a more encouraging jobs report, as September numbers were revised upward and October numbers exceeded expectations. 6.5 million new hires were made in September, and over 530,000 new jobs were added in October, but around 10.4 million jobs remained open. The pre-pandemic job vacancy high was 7.5 million. Since April, 24 million workers have quit their jobs. There are about 160 million people in the entire labor force. Quits are defined as voluntary separations initiated by an employee. Economists and analysts are calling this phenomenon The Great Resignation.
“Quits are up the most in sectors where work is in-person or relatively low paying,” Nick Bunker, an economic research director at Indeed told The Hill.
He cited sharp jumps in quit rates across sectors like manufacturing, leisure and hospitality (restaurant, hotel, entertainment industries), retail, and the health services industries. While quits were concentrated the most in those employment sectors, they increased the most in sectors like arts, entertainment and recreation (i.e. the people who staff live events) as well as local and state government jobs.
The result of the Great Resignation has been one of the most competitive job markets in recent memory. On average across the country, there are seven unemployed workers for every 10 job openings — also a record low. That leaves employers fighting over the same potential employees across sectors. The largest gaps in openings versus available workers remain in health care, transportation and warehousing jobs that require in-person work and where the risk of contracting Covid-19 remains high, ZipRecruiter chief economist Julia Pollak told CNBC.
Exactly why workers are quitting their jobs, though, and how to get them back, is a topic of much debate. Historically poor working conditions, low wages, unaffordable child care, the risk of Covid-19, vaccine mandates, government assistance in the form of stimulus checks, enhanced unemployment and the child tax credit, and a more abstract emotional reaction to the pandemic, have all been pointed to as contributing factors.
Below, we'll take a look at some thoughts about what is going on. In a fascinating show of just how complex this issue is, there does not seem to be any neatly formed "teams" or staunch polarization on this issue, though folks on the right have tended to emphasize government handouts while those on the left have focused more on working conditions. I think it's more instructive for this issue to just explain some of the central theories out there without categorization, so I'm just going to share some of the most compelling analyses I've seen — then give you my take.
In The Atlantic, Derek Thompson explained the strangeness of this economic moment. He said the answer might seem obvious: the pandemic is still killing 10,000 people a week, and people are scared.
"But when you look closely, the direct effects of COVID-19 don’t explain very much," Thompson wrote. "Most pandemic deaths have been among elderly people, not Americans of prime working age. And COVID fears have lessened over the past few months. Even so, the number of Americans under 65 looking for work is still shrinking. The most complete explanation is that the massive fiscal-policy response to the pandemic reduced the urgency of looking for work.
"The United States has spent trillions of dollars to help families get through the economic deep freeze, via stimulus checks, expanded unemployment benefits, and the moratorium on student-loan interest payments," he said. "National eviction bans have taken pressure off renters. Then there’s the record-high surge in savings among families who haven’t gone on vacation or splurged on experiences in more than a year. Add to that the fact that job openings have hit record highs—which means people know that if they wait a month or three, there will still be jobs aplenty to apply to. Seeing this whole picture, more Americans clearly feel like they can take a more leisurely approach to going back to work. Surveys bear this out. A monthly questionnaire by the hiring company Indeed found that the most common reasons given for not looking for work right now are 'having an employed spouse' and having a 'financial cushion,' followed by 'care responsibilities' and then 'COVID fear.'"
In Forbes, Jack Kelly wrote that the "reawakening" of the economy left employers scrambling.
"Tired of the stress of the pandemic, annoyed by irritating bosses, frustrated by low wages and lack of future growth, workers decided that they’d quit—even if another job wasn’t lined up," Kelly said. "It was important to their mental health and emotional well-being to extricate themselves from a toxic, dead-end job. Fortunately, in a hot job market, there are enough opportunities available that people don’t have to worry about finding a new job.
"There are other reasons why people quit," he added. "Working mothers had the challenge of juggling their jobs and also finding childcare. Unfortunately, unable to procure any or reasonably priced childcare options, they temporarily left the workforce. Workers who had to regularly interface with customers were concerned about contracting and spreading the virus, electing to quit and find a different and safer type of job. Warehouse, fulfillment centers and manufacturing saw staff leave, as demand surged and supply chains disrupted, causing workers to feel overwhelmed."
In an October editorial, The Wall Street Journal editorial board said: "One possible culprit is government and employer vaccine mandates that set ultimatums for workers."
"President Biden’s vaccine order first applied to nursing homes, which lost jobs in the month," the board said. "Many states and school districts have also imposed mandates, and state and local education employment fell 161,000. The White House claims its vaccine mandates will boost job growth, but not if unvaccinated workers quit. Democrats have also made quitting an easier economic option. Pandemic enhanced unemployment benefits ended in early September, but that was only one week before Labor’s monthly jobless survey ended. Next month might provide better data on that score. But there are still many other federal financial payments that don’t require work, including a $300 monthly allowance per child, food stamps and rental assistance. Many people have saved some of their transfer payments, and now Democrats are promising more."
In Business Insider, Bonnie Marcus wrote that companies are focusing too much on trying to hire millennials.
"Burned out Gen Z's and Millennials are leaving the workforce for many reasons, many of those reasons are pandemic related. Working remotely, trying to balance the stress of holding on to jobs along with domestic responsibilities has led to not only burnout but mental health issues and a serious re-evaluation of what they want and need from their employers," she said. “However, there may be an easy fix. According to my recent research, there is an untapped talent pool of highly qualified women, aged 45 to 50 and above, who are available and eager to keep working. So why are companies pushing these women out and not leveraging their talent and experience?
"The answer is gendered ageism — the intersectionality of gender bias and ageism — which affects women as they approach 50 and beyond and show visible signs of ageing," Marcus wrote. "This pervasive bias results in women in this age demographic being perceived as less valuable and competent, and contributes to their marginalization and subsequent premature dismissal."
Bloomberg columnists Allison Schrager, Alexis Leondis and Erin Lowry recently held a Twitter chat about The Great Resignation and The Lie Flat movement, a labor protest movement that started in China and spread to the U.S.
"The quitting is definitely a bit of a mystery," Schrager said. "Initially everyone thought it was because of high unemployment benefits and all the money we sent people. Some people are coming back to the labor market, but if you crunch the data, you're still seeing elevated rates of people leaving the labor force and not getting a new job right away. I was surprised to see that almost all the high quit rates have been among people with a high school education or less. Some are actually re-skilling — using this time and money to gain new skills to get a higher paying job, rather than just quitting because they're burned out. And a lot of women in particular still have huge childcare issues."
Liz Elting said the reason is actually "incredibly simple," and everyone is overthinking it.
"All you need is one number: 3 million," she wrote. "That number is the difference between the number of open jobs, 10.4 million as of August, the last month we have data for, and 7.4 million, the number of unemployed workers. Put bluntly, there are far more open positions than people willing to work them, and have been for some time. The confusion so much of the commentator class seems to evince as to what could possibly be driving the ever-increasing number of voluntary resignations depends entirely on an almost willful ignorance of market conditions. 'They’re rethinking their relationship with employment' is all well and good, but it’s meaningless in a condition where workers lack the flexibility to do so. 'They’re chasing higher wages' doesn’t say a single thing about why, of all times, they’re doing so now. 'They want a better work-life balance' just restates the sentiment of workers for the whole postwar era.
"No, the reason is actually quite simple: employers must compete for workers because there are far more open slots than job applicants, and workers are smart enough to recognize that," she said. "Yes, they’re voting with their feet in favor of more flexible work hours, continued availability of remote work, higher wages, and better treatment, but the context that makes that possible, the basic calculus of supply and demand in the labor market, goes ignored."
In Business Insider, Dominick Reuter said employers aren't doing enough for parents.
"During the COVID-19 pandemic, many parents have had their already complicated lives further disrupted by having to juggle at-home lessons and Zoom meetings with work email and meal prep," Reuter said. "Roughly 70% of respondents in a study by the US Centers for Disease Control who were either parents or caregivers reported poor mental health during the pandemic — more than double the rate of those who did not have those responsibilities. The rate for those who were both parents and caregivers was a whopping 85%.
"Nearly 10 million working mothers in America suffer from workplace burnout, according to research by Maven, which also found that mothers were 28% more likely to experience burnout than fathers... Rates of burnout were also higher among Black, Hispanic, and Asian women," Reuter wrote. "While employers say they can't find people to hire, 309,000 women left the labor force in September, which means they are no longer looking for work, and as many as 5 million fewer people have jobs now than in February 2020. A few adjustments from employers could help turn that story around."
Where's the button for "all of the above"?
Anecdotal stories in my own life seem relevant here. I quit my full-time job in April, making me one of the first wave of 24 million people in the now oft-cited statistics of the Great Resignation trend over the last seven months. When I think about what helped contribute to that decision, it's remarkable how many things listed above were at play.
For one, I was working a job as an editor that I no longer loved. Remote work caused by the pandemic took two commuting hours off my day, which I used to invest in this side project called Tangle. I was incredibly fortunate to have a full-time job and a side income, and every stimulus dollar I got immediately went into my savings account or was invested into Tangle. Meanwhile, my wife also had one of the now classic pandemic experiences, deciding she was going to apply to law school when she finished her undergraduate degree and do a complete career change (she had been in theater and the restaurant industry all of her 20s).
Meanwhile, 95% of my disposable income (since I started having disposable income) gets spent on travel and nice restaurants. I’ve never cared about new clothes, nice cars, the latest technology or fancy furniture. The experience economy is always where I put my money (this is a rule in life I suggest to anyone who will listen). That meant during the pandemic, there was nowhere for all my disposable income to go, so it was being saved. As I saw the cushion build, watched Tangle grow, and felt the burnout of a job I no longer enjoyed, the decision to quit and go "all-in" on Tangle became obvious. So I did.
I'm 30 years old. I watched this play out across a spectrum of people in my "age group." Chefs quitting their jobs to go to programming boot camp; friends who hit the lottery with a crypto investment moving to Thailand to start a tea company; cashiers who didn't want to be exposed to Covid-19, taking their unemployment and jumping back into school; Uber drivers who found new work when driving dried up; someone quitting a new job a week after they got it because a better offer showed up. All of that happened just in my direct social groups.
And everyone, I mean everyone, has been talking about whether they want to stick it out at their jobs. Which is another thing: Economist Arindrajit Dube refers to this social multiplier, which basically comes down to workers underestimating how bad their jobs are. When they get forced out of work, they realize what they’ve put up with all this time, and so they decide to find something new. Their coworkers see this, and soon others follow suit.
There are, of course, arguments I find less convincing than others. A lot of people have pointed to the enhanced unemployment benefits as the reason workers aren't coming back, but they expired in September and the data on states who ended them early don’t show a major uptick in new workers. I’m certain enhanced government benefits helped prompt people to quit or left them more comfortable with losing their job, but they don’t fully explain why they aren’t coming back now. Suspending student loan payments and the child tax credit probably play a role, too. This is a developing story, though, and if we see workers trickle back in over the next few months as potential savings or deferred payments burn out, maybe that argument will look stronger.
I'm also not entirely sold on the fear of Covid-19. Over 70% of U.S. adults are fully vaccinated, over 80% partially, and Covid-19 fears are cited by fewer than 20% of unemployed workers not searching for jobs. Generally speaking, the vaccinated seem to have a great deal of trust in the vaccines, and the people most fearful of Covid-19 are above working age.
The noisiness of this debate obscures what I think is obvious, which is that everything everyone is arguing about is actually the answer. It is all of it. Each issue is playing some fractional role — creating a collective shift to more worker power and fewer incentives to take a job one doesn’t want. We see it in the massive labor demonstrations happening across the country, the increased wages and benefits, and of course this willingness to quit. The leverage has shifted. As Liz Elting argued convincingly, the foundation is as simple as a numbers game: The surge in demand for workers caught employers flat-footed, which unlocked the ability for workers to flex on long-held desire for change. But there is also something that is the opposite of numbers, some kind of nebulous, hard to grasp, emotional, mentality shift spreading across the country — one caused directly by the shock of the pandemic as it forced people to re-evaluate, re-prioritize and, apparently, resign.
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A story that matters.
Economists and analysts at the leading rating agencies told Reuters that President Biden's infrastructure and social spending plan would not add to inflationary pressures. The legislation "should not have any real material impact on inflation," William Foster, vice president and senior credit officer at Moody's Investors Service, said. This sentiment was echoed by Charles Seville from Fitch Ratings. You can expect Biden, whose social spending legislation is currently on the ropes, to use these comments to boost support among more moderate members of Congress. Inflation has become a leading issue for voters, and Republicans have said the threat of rising inflation will be increased with more government spending. Other economists have argued the bills would slow inflation in the long-term, but raise it in the near-term. How this debate plays out could have a major impact on whether Biden's plans for parental leave, child tax credits, free pre-K and climate provisions become law.
- 43.7%. The percentage of unemployed workers who were "passively searching" for a job in September, according to an Indeed survey.
- 11.8%. The percentage of unemployed workers who were "actively looking, urgently" for a job in September, according to an Indeed survey.
- 34.4 million. The number of people who have quit their jobs so far in 2021.
- 36.3 million. The number of people who quit their jobs in all of 2020.
- 531,000. The number of jobs added in October.
- 55 million. The approximate number of people who are working in the gig economy.
Have a nice day.
A few years ago, Debbie Blount lost her husband. The two had been avid golfers, and when he died, she lost her passion for the game. After years of mourning and feeling adrift, though, Blount decided to enroll at Reinhardt University — at the age of 62. She became the first person in her family to go to college, and then decided to do something else: She joined the golf team as a walk-on. Now, Blount is 63 years old, a sophomore, and a vital member of the team. At the TWU Fall Invitational she became one of three golfers to be named "all-tournament." CNN has the tremendous story.
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