Tens of millions of Americans have changed jobs over the past two years, a tide of resignations that reflected — and helped create — a rare moment of worker power as employees demanded higher pay, and because employers, short of workers, often gave it to. them
But the “great resignation”, as it was known, seems to be over. The rate at which workers voluntarily leave their jobs has fallen sharply in recent months – although it increased in May – and it’s only modestly above where it was before the pandemic disrupted the US job market. In some industries where turnover was highest, such as hospitality and retail businesses, dropouts have returned to pre-pandemic levels.
Now the question is whether the gains made by workers during the Great Recession will survive the moment — or whether employers will regain leverage, especially if, as many forecasters expect, the economy slides into recession sometime next year.
Already, the pendulum may be swinging back to employers. Wage growth has slowed, especially in low-paying service jobs, where it picked up as turnover peaked in late 2021 and early 2022. Employers, while still complaining about labor shortages, report that it’s easier to hire and retain workers. And those who change jobs are no longer getting the outsized raises that have become the norm in recent years, according to data from payroll firm ADP.
“You don’t see the signs saying $1,000 signing bonus anymore,” said Nela Richardson, ADP chief economist.
Ms. Richardson compared the job market to a game of musical chairs: As the economy began to recover from pandemic shutdowns, workers were able to move freely between jobs. But with recession warnings in the air, they are becoming nervous about being caught out of work when less is available.
“Everybody knows the music is going to stop,” Ms Richardson said. “That will lead people to stay a little longer.”
Aubrey Moya joined the great resignation about a year and a half ago, when she decided she had had enough of the low wages and hard work of waiting tables. Her husband, a welder, was making good money – he too had changed jobs in search of better pay – and they decided it was time for her to start the photography business she had long dreamed of. Ms. Moya, 38, became one of the millions of Americans to start a small business during the pandemic.
However, today Ms. Moya questions whether her dream is sustainable. Her husband earns less money, and living costs have risen. Her clients, stung by inflation, don’t splurge on the boudoir photo sessions in which she specializes. She’s nervous about paying in her Fort Worth studio.
“It was a moment of empowerment,” she said. “It was a moment of ‘We’re not coming back, and we’re not going to take this anymore,’ but the truth is, yes, we are, because how else are we going to pay the bills?”
But Ms. Moya isn’t going back to waiting tables just yet. And some economists think workers are likely to keep some of the gains they’ve made in recent years.
“There are good reasons to think that at least some of the changes we’ve seen in the low-wage labor market will prove lasting,” said Arindrajit Dube, a University of Massachusetts professor who has studied the pandemic economy.
The great resignation has often been portrayed as a phenomenon of people quitting work altogether, but the data tell a different story. Most of them quit to take other, typically better-paying jobs – or, like Ms. Moya, to start businesses. And while turnover increased in nearly all industries, it was concentrated in low-wage services, where workers generally had little leverage.
For those workers, the rapid reopening of the personal economy in 2021 provided a rare opportunity: restaurants, hotels and stores needed tens of thousands of employees when many people still avoided jobs requiring face-to-face interaction with the public. And even as worries about the coronavirus faded, demand for workers continued to outstrip supply, in part because many people who left the service industry didn’t want to return.
The result was an increase in wages for workers at the bottom of the earnings ladder. Average hourly earnings for ordinary restaurant and hotel workers rose 28 percent from the end of 2020 to the end of 2022, far outstripping both inflation and overall wage growth.
In recent paperMr. Dube and two co-authors found that the earnings gap between workers at the top of the income scale and those at the bottom, after widening for four decades, has begun to narrow: In just two years, the economy has shrunk by about a quarter. of the increase in inequality since 1980. Much of that progress, they found, came from an increased ability—and willingness—of workers to change jobs.
Wages are no longer rising faster for low-wage workers than for other groups. But importantly in Mr Dube’s view, low-wage workers have not lost ground over the past two years, making wage gains that more or less keep up with inflation and higher earners. This suggests that turnover could be falling not only because workers are becoming more cautious but also because employers have had to raise wages and improve conditions enough so that their workers are not desperate to leave.
Danny Cron, a restaurant server in Los Angeles, has changed jobs twice since returning to work after pandemic restrictions were lifted. He initially went to work at a dive bar, where his hours were “brutal” and the most lucrative shifts were reserved for servers who sold the most margaritas. He quit to work at a large chain restaurant that offered better hours but little scheduling flexibility — a problem for Mr. Cron, an aspiring actor.
So last year, Mr. Cron, 28, quit for a job at Blue Ribbon, an upscale sushi restaurant where he makes more money and is more accommodating of his acting schedule. The strong post-pandemic job market, he said, gave him the confidence to keep changing jobs until he found one that worked for him.
“I knew there were many other jobs, so I felt less attached to any one job out of necessity,” Mr. Cron wrote in an email.
But now that he has a job he likes, he said, he feels little desire to keep looking — partly because he feels the job market has softened, but mostly because he’s happy where he is.
“Looking for a new job is a lot of work, and training for a new job is a lot of work,” he said. “So when you find a good service job, you won’t give it up.”
The labor market remains strong, with unemployment below 4 percent and job growth continuing, albeit at a slower pace than in 2021 or 2022. But even optimists like Mr. Dube concede that workers like Mr. Cron could lose leverage if companies cut jobs en masse.
“It’s very tenuous,” said Kathryn Anne Edwards, a labor economist and policy consultant who has studied the role of quitting in wage growth. A recession, she said, could wipe out gains made by hourly workers in recent years.
However, some workers say one thing has changed in a more lasting way: their behavior. After being hailed as “essential workers” early in the pandemic — and receiving bonuses, paid sick time and other benefits — many people in hospitality, retail and similar jobs say they were disappointed to see companies cut back on profits as the crisis eased. The big resignation, they say, was partly a reaction to that experience: They no longer wanted to work for companies that didn’t value them.
Amanda Shealer, who runs a store near Hickory, NC, said her boss recently told her she needs to find more ways to accommodate hourly workers because they would otherwise leave for jobs elsewhere. Her response: “Me too.”
“If I don’t feel like I’m supported and I don’t feel like you’re taking my concerns seriously and you guys just keep dumping more and more on me, I can do the same thing,” Ms. Shealer, 40, said. “You no longer have the loyalty to a company, because the companies don’t have the loyalty to you.”