Pompeu Research Club

Pompeu Research Club

The Great Resignation

Posted on Author adminPosted in MacroeconomiaLeave a Reply
Why is it a trend?

Authors: MERITXELL CORCOY and ALBA FUSTEGUERES

Download the full article below:

The Great ResignationDescarga

INTRODUCTION

Millions of employees throughout the world have left their jobs or chosen not to return to positions that had been placed on furlough in order to find better employment or change their career paths. Anthony Klotz coined the term the Great Resignation to this economic movement started in late 2020 and early 2021.

The Great Resignation is the way how humans have expressed the palpable fears of societies who question their capacity to handle all current changes, including the pandemic’s aftermath, the war in Ukraine, international threats, the effects of global warming on our lives and inflation’s impact on everyone’s day-to-day life.

Being The Great Resignation a current and major topic, the aim of this article is to delve deeper into the matter since, although it is a movement born in the United States, it has been spread around the globe. It has been structured in terms of causes, facts and consequences in order to understand the repercussions for both employees and employers.

WHAT IS THE GREAT RESIGNATION

The Great Resignation refers to the mass resignation of American workers beginning in the spring of 2021, at a time when there was a high demand for labor and a low unemployment rate. The psychologist Anthony Klotz anticipated this fact, and although it was first observed only in the United States, it has subsequently spread globally, with the biggest labor exodus taking place in 2021.

“People are leaving work in droves, and there are no signs that this mass exodus will slow
down in the short term”1.

There are multiple reasons why this incident occurred, but a survey2 conducted in November 2021 revealed that 23% of the US employees were planning to quit their jobs in the following year. Many of these demands for change have been the result of workers giving more attention to the balance between work and personal life after a considerable amount of time working remotely from home.

People frequently quitted their occupations with the purpose of switching employers rather than to become inactive or unemployed. In reality, employees have just not changed positions; in some situations, they’ve also changed jobs within the same organization or even started their own firm.

Additionally, Harvard economist Jason Furman suggested in June 2021 that the higher rate of employees quitting their employment was consistent with the increase in job opportunities, indicating that rivalry among employers was to blame for the increase in resignations. The proportion of employees quitting their employment from January 2020 to March 2022 was the highest since the beginning of the century. This is shown in the graph3 below.

“People are leaving work in droves, and there is no signs that this mass exodus will slow down in the short term”. – World Economic Forum

As can be seen, while in 2020 a minimum can be observed in the rate of job quitting, it should be noted that from this moment onwards a continuous increase of the index in question takes place. More specifically, the retail trade sector (4.5%) and accommodation and food services (6.1%) sectors saw the greatest rates of resignation during this time. With a rate of 9.9%, the hospitality and food services sector likewise had the biggest number of job opportunities. The opening rate for healthcare and social assistance was also high, with a value of 9%.

CAUSES

Some have suggested that the COVID-19 pandemic’s additional effects may have contributed to the rising quitting rate. People have left their jobs for a variety of reasons, some of which are given below.

Firstly, pandemic experiences caused some people to reconsider their goals in life, cut back on their working hours, or quit their jobs altogether.

Secondly, even after legalizing remote work in 2020, businesses started demanding workers to come back to the office, which reduced worker’s utility since remote work is positively valued.

Additionally, the recovery of the labor force participation rate from pandemic lows has been sluggish, which has increased competition for employees.

Another reason is that some individuals quitted their jobs because they could not find childcare when schools switched to online learning, while others did it because they would not get the COVID-19 vaccinations that were required by their employers.

Finally, during the COVID-19 pandemic, the so-called “essential workers” (such as those who worked at grocery and retail stores, hospitals, and restaurants) considered themselves overworked and underpaid by their employers, many of whom did not seem eager to commend them for taking such significant risks by giving them anything more than platitudes for maintaining the public’s access to essential services. Few earned the hazard pay associated with such employment, even though essential employees were frequently hailed as heroes. Since many frontline employees felt like disposable cogs in a callous machine, as a result, workers deserted the retail, restaurant, grocery, and hospitality industries in record numbers as
additional jobs opened up in late 2020 and early 2021.

Nevertheless, it should be noted that in a Pew Research Center poll done in February 2022, the main reasons provided by the workers who left were poor salary and a lack of promotion prospects, indicating that many went for a better offer.

COVID-19

According to data from the Job Opportunities and Labor Turnover Survey, the number of job openings in the United States during 2021 was much higher than the number of hires, and the monthly resignation rates were the highest in the survey’s 20-year history. The absence of protective clothing, virtual micromanagement or the inability to balance job demands with their children’s remote schooling were among the issues that employees were voicing online as the epidemic raged on.

There are those who question if the widespread uncertainty caused employees to reevaluate their goals in life and work, contemplate options they never would have considered before the pandemic or simply recognize that their working circumstances have been unacceptable.

There are alternative viewpoints, though, as it is a recent phenomenon that needs more research. For instance, some writers argue that The Great Resignation is more than just the pandemic’s short-term turmoil. Instead, the growing quit rates that have been a pattern for more than a decade are continuing. This tendency is influenced by five primary factors such as retirement, relocation, reconsideration, rearranging, and resistance. The authors contend that each of these elements will continue to exist.

The following graph4 illustrates the aforementioned trend and confirms the notion that The Great
Resignation has its roots more deeply rooted in the COVID-19.

The graph and the figures provide a clear story. The average monthly quit rate climbed by 0.10
percentage points annually from 2009 to 2019.

Then, in 2020, the uncertainty brought on by the COVID-19 outbreak caused a slowdown in the
resignation rate as more employees remained in their positions. That pause did not last so long.

A record number of employees left their positions in 2021, sparking the so-called Great Resignation, when stimulus payments were distributed and some of the anxiety subsided.

However, that number includes some employees who may have left their jobs in 2020 if there had been no pandemic. Now, back to the pre-pandemic norm, American companies will certainly have to deal with it for years to come.

The Great Resignation did not suddenly materialize. It was a logical outcome of the five R’s: retirement, relocation, reconsideration, reshuffling, and reluctance, and it was sparked by the epidemic.

Workers are retiring more frequently, but they are not moving in large numbers; they are reevaluating their work-life balance and parental responsibilities; they are relocating locally rather than completely leaving the labor market; and, due to pandemic-related fears, they are showing a reluctance to return to in-person jobs.

The Big Quit began during this period (2020), according to most experts, but the quit rate, which was first tracked in 2000, tells a different tale. A graph of the data demonstrates a sluggish but consistent upward trend from 2009, which is only halted by the labor scarcity brought on by the shutdowns in 2020 and the ensuing layoffs. When viewed from this angle, the big resignation is an ongoing phenomenon that has been around for at least ten years.

5

SUPPLY AND DEMAND IN THE LABOR MARKET

There are, and have been for some time, many more available positions than there are workers prepared to fill them. For instance, the number of available positions in August 2021 WERE 10.4 million and the number of unemployed workers, 7.4 million, there are three million job positions apart6.

The explanation is fairly straightforward: firms must fight for employees since there are many more unfilled positions than applicants, and employees are aware of this. The focus is usually on the preferences for more flexible work schedules, the possibility of remote work indefinitely, greater earnings and better treatment, but the background that makes this possible—the fundamental equation of supply and demand in the labor market—is overlooked.

The world entered various states of lockdown in the middle of March 2020, businesses started making large-scale layoffs, and the economy shrank rapidly in ways not seen in the last ninety years.

For the first time since it all started, civilians set out into the world in the summer of 2021. That led to a tremendous, unexpected increase in demand for goods and services that millions of people who had been cooped up in their houses for months were unaware of. As a result, there was a corresponding rise in demand for workers to supply the aforementioned goods and services, first in front-line customer-facing roles and then a little later in corporate and administrative ones.

Companies that fired large numbers of workers wanted to grow quickly, so they went on a hiring rampage, anticipating a flood of applications. However, fear of the virus persisted, and a traumatized public showed reluctance to go back to work until they were little more certain they would not be endangering the health of themselves and their families.

The labor supply was decreasing, but very slowly; Hot Vax Summer7 lasted the entire month of June before turning into Scary Delta Summer, which further reduced it. Employees began sending out resumes while bosses vented on social media about how “nobody wants to work anymore”; after all, if “nobody wants to work” then it stands to reason that those who do are worth more. In other words, the only thing that actually happened was that for the first time in most of their careers, workers demonstrated the ability to understand that they had real leverage. The company needed them more than they needed the company.

As a result of the unbalanced employment condition, the power relationship between employer and employee changed and is still changing: increasingly, employees are gaining bargaining power. Undoubtedly, engaging in this new transaction requires refocusing on several issues and circumstances. Essentially, considering each person’s potential as a resource (rather than just “filtering” them through non-negotiable requirements). Followed by the significance of selecting new locations and settings for the mediation: it is crucial to locate a supportive setting where the power dynamic is rebalanced. Another factor to consider is rethinking work as a continuous experience of skill growth necessitates agreement on the standard of the working environment (human, educational, and material) as well as the extent to which each employee may contribute. And finally, mobilizing all the participants in intricate territorial ecologies where some parties’ priorities can occasionally conflict with others.

FACTS

Employee unhappiness with salaries has dominated media coverage of the Great Resignation. However, research shows that remuneration only has a minimal effect on employee turnover (however, in other contexts, such as for nurses in major healthcare systems, compensation can be a significant predictor of attrition).

MIT investigators has carried out a study8 that examines the effects of more than 170 cultural topics on employee attrition in Culture 500 organizations from April through September 2021. The analysis indicates the top 5 predictors of attrition during the Great Resignation and the findings indicate that toxic corporate culture is the most significant cause, followed by job insecurity and reorganization, high levels of innovation, failure to recognize employee performance and finally poor response to COVID-19.

A toxic corporate culture is ten times more significant than compensation in predicting turnover and is by far, the strongest predictor of industry-adjusted attrition. The main causes of toxic cultures are workers feeling disrespected, unethical behavior, and inability to encourage diversity, equity, and inclusion.

THE DATA

The majority of experts believe that this phenomenon started in earnest around the end of 2020 or the beginning of 2021, following a sharp decline in the quit rate9 during the early COVID-19 pandemic due to a lack of work as a result of widespread shutdowns.

Following the introduction of vaccines and the easing of restrictions, several businesses restarted operations, leading to an increase in the number of job vacancies. The quit rate also nearly doubled throughout this period, rising from around 1.6% in early 2020 to roughly 3% by late 2021.

Even if the average resignation rate was high, it varies amongst businesses. Industry explains some but not all this variance: we saw notable differences in attrition rates even within the same industry.

Workers in the leisure and hospital industries had relatively high quit rates. Food service employees’ quit rates increased to 6.8% in October 2021, according to the U.S. Bureau of Labor Statistics. This is much higher than the industry average of 4.1% for the previous 20 years and considerably higher than the industry’s highest leave rates of 5% in 2006 and 2019. With a leave rate of 4.7%, the retail sector ranked second. Between the beginning of the pandemic and November 2021, almost one in five healthcare professionals left their positions.

The Bureau of Labor Statistics found an almost perfect link between the quit rate and swap rate. Workers weren’t quitting their jobs just to quit; rather, they were quitting in order to use their labor power to secure positions with greater compensation, benefits, and flexibility.

Due to the low unemployment rate and high labor demand, businesses had to compete with one another by offering incentives to job searchers. According to the New York Times, “When workers switched jobs, they often increased their pay. Wages grew nearly 10 percent in leisure and hospitality (from May 2021 to May 2022) and more than 7 percent in retail,” two of the sectors that were most severely impacted by the Big Quit. Non-resigning employees have occasionally been able to take advantage of this change in the labor market by requesting more compensation and more accommodating working conditions. This frequently means the option to start (or continue) working remotely for many office workers.

Both the blue-collar and white-collar industries10 have been affected by the Great Resignation. However, of all the industries, some of the hardest hit companies employ mostly blue-collar people. Comparatively, the management consulting had the second-highest attrition rate among those that employ white-collar workers. The industry with the biggest proportion of engineers and technical workers is enterprise software, which also saw substantial churn.

Unsurprisingly, during the first six months of the Great Resignation, turnover was lower than usual for businesses with a reputation for having a positive culture. Companies that are more innovative have greater turnover rates than their more traditional rivals. Technology-intensive industries are not the only ones affected by this pattern, as innovative businesses have also seen increasing turnover rates.

A record 4.0 million Americans left their employment in April 2021, and the numbers remained high for a long period of time (in June 2021, about 3.9 million workers left their jobs). Going deeper in the country, the South had the highest rate of resignations (2.9% of the workforce resigned willingly in June), followed by the Midwest (2.8%) and the West (2.6%). With 2.0% of workers resigning in June, the Northeast is the region with the most stability.

Early in August 2021, PricewaterhouseCoopers surveyed its workforce, finding that 65% of workers stated they were seeking for a new position and 88% of executives claimed their organization was dealing with higher-than-average turnover. According to a Deloitte study that was featured in Fortune magazine in October 2021, among the Fortune 1000 companies, 73% of CEOs believed that the labor shortage would negatively affect their companies over the next year, 57% thought that finding talent was one of their biggest challenges, and 35% had already increased benefits to help with employee retention.

Over 100,000 American employees participated in or were prepared for strike action during the Striketober strike wave that occurred in October 2021 during the Great Resignation. Some economists compared the Great Resignation to a mass strike by employees denouncing poor wages and working conditions.

However, the U.S. workforce surpassed its pre-COVID pandemic level by August 2022. Many American employees took advantage of the labor crisis to switch to positions with better pay, benefits, and schedules than their existing ones. Labor unions have been founded or joined by some. A lot of potential firms are also providing paid training to entice candidates. Even still, job growth has been unequal as lower-paying industries—particularly those in leisure, hospitality, retail and manufacturing—lose employees to higher-paying ones.

Unsatisfied with their existing jobs, a record number of Americans left to launch their own companies, only to face a severe labor shortage that they had contributed to. In actuality, small firms are most likely to have trouble hiring quality candidates. The United States’ domestic supply chain disruption has been made worse by the labor deficit.

Moreover, there have been multiple movements of companies to states with cheaper business expenses, a huge pool of qualified people, high-quality education, high standards of living, and solid infrastructure in response to the labor imbalance. The rate of salary growth has accelerated; in December 2021, it was at 4.5%, the highest level since June 2001. Additionally, in order to retain employees, several fast-food companies, like McDonald’s, are offering extra amenities including healthcare coverage and college scholarships.

The “Great Resignation” term’s originator, Texas A&M University professor Anthony Klotz, asserts that organizations may keep burned-out workers on staff by providing them with breaks and other assistance11.

Employers should provide more flexible work options, such as remote work, hybrid work, and flexible schedules12. Additionally, rather than making top-down, tone-deaf judgments, they could pay attention to what employees want and need13.

“Flexible working is here to stay”, states Anthony Koltz. Since the pandemic began, work practices
have undergone a significant transformation. Many people have been hesitating to go back to the workplace full-time after months of working from home, free from the cost and trouble of commuting and with more time for family and other activities.

In a recent Beamery study, more than 35% of participants stated they had a better work-life balance
during the pandemic, and 42% said they wanted flexible work arrangements to continue. In response,
a lot of businesses are accepting flexible hours as the new norm. This information is collected in the
following chart14, with which it can be concluded that the imposition of flexibility could be a solution to The Great Resignation.

CONSEQUENCES

Whether or not the Great Resignation will have an impact that lasts is a matter of debate and changes depending on each region. For example, workers in Western nations have been returning to the workforce in significant numbers in late 2021 and early 2022, despite the fact that quit rates were still high.

Below, the different repercussions that The Great Resignation has in places such as Europe, Australia, and China are analyzed.

EUROPE

Europe, as the US, is having limitations when recruiting. For instance, in France, in April 2022 the Pôle Emploi stated that employment opportunities in France will grow greatly (+12%), however, 58% of organizations believe that the recruitment will be challenging. Paradoxically, the Directorate for Research, Studies and Statistics (DARES) confirms that “At present, the number of resignations is high, though neither unprecedented nor unexpected, given the economic context. This reflects the dynamic nature of the labor market and a situation in which bargaining power is shifting in favor of employees.”

The recruitment difficulties are not the only sign that something is changing. Many training and employment support programs have been trying to engage the public for a while now. Yet the offers are plentiful, of high quality, and frequently pertinent in terms of making access to jobs easier, it doesn’t receive the expected reach. This “desertion” has nothing to do with the resources raised or the value and applicability of the offer. Even though it is true that the current situation could be described as circumstantial, it is the result of a long term and progressive process of disaffiliation and a loss of trust. In other words, we are referring to a structural problem that includes many more aspects rather than employment.

If we look more deeply into data, we can find a study carried out by HR company SD Worx in Belgium, France, the United Kingdom, Germany and the Netherlands. From those countries, Germany had the highest percentage of COVID-19-related resignations, with 6.0% of the workforce quitting their positions. The United Kingdom came in second with 4.7%, followed by the Netherlands with 2.9% and France with 2.3%. With 1.9%, Belgium had the fewest resignations.

Focusing on the United Kingdom, over 400,000 workers abandoned their jobs between July and September of 2021, 270,000 more people than two years earlier. In December 2021, there were a record-high 1.3 million open positions, in other words, 4.4 vacancies for every 100 open positions. According to Tony Wilson, head of the Institute for Employment Studies, the U.K. employment shrank in 2020 for the first time in more than twenty years, mostly as a result of older workers retiring. Most workers who leave their occupations are Millennials in their 30s, followed by those in their 20s.

The Great Reshuffle phenomena is being fueled by inflation and a cost-of-living problem.

Households all throughout Europe are feeling the effects of this crisis brought on by the epidemic and made worse by the conflict in Ukraine, which is driving people to look for professions that would provide them a sense of financial security during uncertain times. Concretely in the UK, lots of Britons workers had gone back to their old jobs which firstly had quit, while other senior citizens had decided against retiring.

According to the PWC poll, more than a third of respondents intend to request a raise from their employers. Executive Philip Bacon told Euronews that his organization is directly experiencing this issue. He said “We are seeing clients lose team members from Eastern Europe who are going after US jobs with better pay”. While some businesses are attempting to retain their workers by raising salaries and offering new benefits, many just cannot afford to do so at this time.

MRL Consulting Group’s chief executive, David Stone, said that the cost-of-living issue sweeping the US and Europe affects everyone, both businesses and employees. Businesses are seeking ways to save operating expenses, most notably by eliminating their physical presence and switching to a remote-working model. Meanwhile, employees are now seeking pay raises of between 10 and 20 percent across all industries, and with good reason: they are aware of their value and demand, and they won’t be accepting less anytime soon, especially given the record inflation rates.

AUSTRALIA

Australians have not been left behind and have followed the same trend as the rest of the country: because of the lockdowns and the increased workload brought on by the labor scarcity, they have decided to reconsider their career and lifestyle alternatives. Due to the significant changes in working practices brought about by COVID-19, they have also had time to reflect, and finding a balance between work and personal life has been a top priority. According to a research conducted by PwC Australia (with a poll of more than 1,800 participants), 38% of Australian employees want to quit their present employer during the next year, and 61% of those who left a company the previous year plan to do the same.

People will either quit soon or stay for a very long period, as 55% of Australian employees anticipate staying with their firm for at least five more years. Additionally, the efficacy of hybrid work depends on Australian employees’ 93% confidence and 77% commitment to their jobs. This may comfort companies, particularly during a particularly trying time for both employers and employees, but it does not always encourage loyalty.

In fact, according to the director of the future of work at PwC Australia, Dr. Ben Hamer, “The
balance of power has shifted from the employer to the employee. Competition for talent has intensified, and those that fail to adapt take a big hit. To protect themselves from the full force of The Great Resignation and attract the right skills, companies need to know what workers really want and reimagine their employee value proposition to deliver on expectations.”

According to former Australian treasurer Josh Frydenberg, the labor market in Australia is undergoing a Great Reshuffle rather than a Great Resignation. The Treasury estimates that over a million workers found and started new jobs between November 2021 and February 2022. 10% more than the pre-COVID average. Over 300,000 employees moved up the ladder and got better pay after leaving their jobs.

The Treasury also revealed that employees who changed occupations earned pay raises of between 8% and 10%. Frydenberg affirmed that these employees also transferred to companies with higher productivity and growth opportunities. In addition, he also stated that “when we give the company’s employees, who are assets, priority, the great resignation will soon vanish”.

It is crucial to remember that the great resignation has some positive features as well since it gives employers and workers a chance to reassess and start over. The workplace is a better place and the company will develop when both bosses and workers can be open and honest. “It is time for business to get back to business,” declared Frydenberg.

CHINA

After the first impact of COVID-19 in the first few months of 2020, the recovery to the workplace in China happened quickly. The Great Resignation was significantly influenced by the large number of workers who either lost their employment, had their pay or working hours reduced, or worked remotely for more than a year.

Even if the situation in China is considerably different, there are many similarities between the dissatisfaction about the working environment.

The Great Resignation was a popular trend in 2021, but in China, the response came in the form of tang ping, or “lying flat,” which is translated as younger Chinese workers’ opposition to the country’s intense overworking culture and pressure to succeed in a hypercompetitive workplace. According to the ABC Money journal, the government-endorsed “Chinese Dream” was not that appealing for the new generation who is not willing to sacrifice their life to an extremely hard-work job.

The Great Resignation and tang ping share a general discontent with one’s current career and financial situation that is felt by mostly younger workers in their 20s and even into their early 40s.

POSSIBLE THREATS

Because of the uphill battle some firms are currently facing in terms of attracting and maintaining talent, some in the media are referring to the Great Resignation as a “turnover tsunami.” However, there are still more obstacles they must overcome, including issues with data security threats and significant personnel turnover.

Data loss is unavoidable when an employee departs a company, which is a danger. Furthermore, a recent study15 found that 63% of all employees acknowledged to use information from their prior employer in their new position, yet a great deal of people steals information on their way out the door unknowingly.

Whether intentional or unintentional, the results might be disastrous. The Great Resignation may really be one of the greatest insider risks to corporations in the last generation.

For the numerous firms who shifted to a mixed working paradigm, this danger has only increased. Due to the suddenness with which remote working was adopted during the pandemic, bring-your-own-device (BYOD) usage skyrocketed, increasing in this way the number of potentially uncontrollable data silos and, critically, the attack surface for thieves.

In the first year of the pandemic, 67% of employees said they were using personal devices to get some of their work done. What’s more, a staggering 87% of organizations said they were relying on their employees’ ability to access mobile business applications and other important information from their personal smartphones.

Although there were many advantages to BYOD, especially during the quick shift to remote working, the associated risks to security and data hygiene were frequently disregarded.

This information can be maliciously used to provide a new employer a competitive edge or power against a former employer. However, it’s still a serious security issue even if the exemployee isn’t aware they’re exfiltrating data and it just sits idle on their laptop.

The Great Resignation, BYOD and a tendency toward hybrid working have all made the problem much more challenging to handle than it was during times of typical employee turnover.

CONCLUSIONS

The Great Resignation makes evident that a group of unrelated events that at first appeared to have no connection to the labor environment have in fact been a trigger in this field. Millions of people have been impacted by this crash, including both employers and employees, even if initially not all the causes directly affected them. For instance, in Europe, the Ukrainian War has influenced all the European citizens since, even if the direct consequences do not affect most of the Europeans, the indirect repercussions have been spread all around the world.

In other words, it illustrates just how complex and unpredictable economic, social and health impacts affect the workforce and the workplace.

Once it has been reaffirmed that this phenomenon has affected the whole economy and population, the effects in terms of welfare16 for both employees and employers have been analyzed.

Focusing on workers, the first way to measure the impact of the Great Resignation on its welfare is real wages. Real wage is the ratio between nominal wage and prices. All along the article, it has been shown that wages have increased because of the lack of supply in the labor force. On the other hand, prices have also suffered by exponentially increasing. It can be contrasted with data: meanwhile the increase in wages in the US during 2022 has been registered to be 4%17, inflation has reached 6.5%18, thus achieving the historical maximum in recent years. Therefore, the total outcome results to be a decrease in the ratio, which implies a worse-off situation for employees.

Nevertheless, real wages is not the only valid measurement. Welfare can also be quantified in the matter of bargaining power. Defined as the capacity of parties to exert influence over each other during an argumentative situation, workers seem to have improved their position versus the employers compared to the before-Great Resignation condition. Again, this is the result of the lack of jobs supply, which means that laborers are more valued, arousing the company to be even more interested in keeping and satisfying them. Consequently, this fact drives workers to a better-off situation, since they are given more power when deciding and claiming for better job conditions (as wages could be).

Even though it may seem that both conclusions are contradictory, they are not. In general terms, it can be defended that laborers are affected ambiguously by the Great Resignation. The reason behind lies in a trade-off between purchasing power and the individuals’ conditions inside the companies. More precisely, based on their unique situation, each employee will weigh each side of the balance differently. In other words, if a person values their economic situation more (that is, they need or want more purchasing power) they will prefer an increase in real wages; and therefore, will see the Great Resignation as a threat. Conversely, if the focus is on a person who is just concerned with their professional careers (while ignoring their financial condition), the Big Quit will mean an improvement in his path, since he will have more chances to prosper at a professional level.

Regarding employers, the measurement of welfare is based on the marginal product of capital. MPK is the ratio between labor and capital and it expresses how much the firm’s productivity increases when the organization adds one unit of capital. During the Great Resignation, there has been a big quit of the labor force, while capital has been kept constant. Accordingly, MPK has suffered from a reduction, implying in this way, a worse-off situation for capitalists.

This statement can be reaffirmed by checking the other definition of marginal product of capital:the ratio between the return of capital19 and prices. Going deeper in the return of capital, both numerator and denominator remain constant: prices do increase (as explained previously) and consequently quantities decrease. The same procedure can be applied in the case of wages and labor. Therefore, the numerator’s equation is self-balanced out and remains constant. On the other hand, capital has not suffered from any change during the period of the Great Resignation. In conclusion, both effects entail invariance in the return of capital. Considering the recent reasonings and the MPK formula20, it can be concluded that the proportion referred to ends up with a worse-off condition for employers.

As has been demonstrated all along the article, the Great Resignation has been detrimental for most of the population. As has already happened in other crises, the butterfly effect has caused a local event in the United States to end up affecting globally. The consequences explained in this article are only the beginning of this phenomenon. Who knows how it will continue? Are four million employees substantial enough to alter the current international labor structure?

  1. World Economic Forum (November 2021). EXPLAINER: WHAT’S DRIVING “THE GREAT RESIGNATION”? Visited on December 23rd, 2022. ↩︎
  2. CareerArc (June 2022). 23% OF EMPLOYED AMERICANS PLAN TO QUIT IN THE NEXT 12 MONTHS: 23 QUIT STATS FROM THE GREAT RESIGNATION + REHIRE SURVEY. Visited on December 20th, 2022. ↩︎
  3. Federal Reserve Bank of Saint Louis, Investopedia (November 2022), WHAT IS THE GREAT RESIGNATION? CAUSES, STATISTICS AND TRENDS. Visited on December 10th, 2022. ↩︎
  4. Harvard Business Review (March 2022), THE GREAT RESIGNATION DIDN’T START WITH THE PANDEMIC. Visited on 23rd December 2022. ↩︎
  5. Bureau of Labor and Statistics via St. Louis FRED, December 2022. ↩︎
  6. Forbes (November 2021), The Incredibly Simple Reason Behind The Great Resignation. Visited on 15th December 2022. ↩︎
  7. Some people refer to the summer of 2021 as the “Hot Vax Summer” since it permitted people to temporarily participate in enjoyable activities that were risky or prohibited in the summer of 2020 due to lack of access to COVID-19 vaccinations. ↩︎
  8. MIT Sloan (January 2022). TOXIC CULTURE IS DRIVING THE GREAT RESIGNATION. Visited on 16th December 2022. ↩︎
  9. The number of monthly resignations divided by total employment. ↩︎
  10. White-collar workers can be found in office environments in clerical, administrative, or management roles, while blue-collar workers typically undertake manual labour. ↩︎
  11. The Boston Globe (June 2022). THE GREAT RESIGNATION IS LOOMING: WHY PEOPLE ARE QUITTING THEIR JOBS POST PANDEMIC. Visited on 23rd December 2022. ↩︎
  12. TechRepublic (May 2021). THE GREAT RESIGNATION OF 2021: ARE 30% OF WORKERS REALLY GOING TO QUIT? Visited on 21st December 2022 ↩︎
  13. Harvard Business Review (August 2021). DON’T FORCE PEOPLE TO COME BACK TO THE OFFICE FULL TIME. Visited on 23rd December 2022. ↩︎
  14. Research & Insights Group, Visier Inc., 2021. ↩︎
  15. ThreatPost (November 2020), CODE42 INCYDR SERIES: WHY MOST COMPANIES CAN’T STOP DEPARTING EMPLOYEE DATA THEFT. Visited on: 15th January 2023. ↩︎
  16. Welfare is used to evaluate utility and how its changes affect individuals. Hence, this is the
    measurement that will be used in the study. ↩︎
  17. CNBC (November 2022). INFLATION IS COMING DOWN. HERE’S WHAT THAT MEANS FOR YOUR ANNUAL PAY RAISE. Visited on: 4th January 2023 https://www.cnbc.com/2022/11/25/inflation-is-coming-down-heres-what-that-means-for-annual-payraises.html ↩︎
  18. CNBC (January 2023). HERE’S THE INFLATION BREAKDOWN FOR DECEMBER 2022- IN ONE CHART. Visited on: 23rd November 2022 https://www.cnbc.com/2023/01/12/heres-the-inflation-breakdownfor-december-2022-in-one-chart.html ↩︎
  19. The return of capital follows the formula RK = (PQ-WL)/K. ↩︎
  20. The marginal product of capital follows the formula MPK = RK / P. ↩︎

WEBGRAPHY

Deixa un comentari

L'adreça electrònica no es publicarà. Els camps necessaris estan marcats amb *

This site uses Akismet to reduce spam. Learn how your comment data is processed.