The ‘Great Resignation’ has come to an end. Will workers’ power last?
The ‘Great Resignation‘ has come to an end. Will workers’ power last?
Tens of millions of Americans have switched jobs over the last two years, a wave of resignation that mirrored — and helped create — a rare moment of worker power as employees sought better compensation and as companies, short on personnel, often gave it to them. This rare time of worker power helped create a rare moment of worker power as tens of millions of Americans changed employment over the previous two years.
However, it seems as though the “great resignation,” as it became known, is coming to an end. Although it inched up in May, the rate at which people voluntarily leave their employment has decreased significantly over the past several months and is only marginally higher than it was before the epidemic disturbed the U.S. labour market. The number of people departing their jobs has returned to pre-epidemic levels in several fields, such as the hotel and retail industries, which had the greatest turnover rates.
Now the question is whether or not the gains that workers won during the great resignation will survive the moment, or whether or not employers will recover leverage, particularly if, as many economic forecasts believe, the economy slides into a recession sometime within the next year. If this happens, the topic becomes even more relevant.
There are signs that the pendulum is starting to swing back towards employers. The rate of wage increase has decreased, particularly in low-paying service professions where it rose as turnover reached its high in the latter half of 2021 and the early part of 2022. Employers are reporting that it has become simpler to hire and keep workers, despite the fact that they continue to complain about labour shortages. According to data provided by ADP, a company that specialises in payroll processing, workers who switch employment are no longer getting the massive pay increases that have become the industry standard in recent years.
Nela Richardson, the chief economist at ADP, stated that one no longer sees banners advertising signing bonuses of one thousand dollars.
Ms. Richardson likened the labour market to a game of musical chairs, explaining that after the economy started to recover from the effects of the pandemic shutdowns, people were allowed to switch occupations without any restrictions. However, as warnings of a recession become more prevalent, people are growing increasingly anxious about the prospect of being unemployed at a time when fewer jobs are available.
Ms. Richardson remarked that “everyone knows the music is about to stop,” and she went on to elaborate. “As a result of that, people will remain in their current locations for a little while longer.”
A little over a year and a half ago, Aubrey Moya decided that she had had enough of the poor salaries and backbreaking labour that came with the job of waiting tables, and she chose to join the big resignation. Together, she and her husband came to the conclusion that it was finally the right moment for her to launch the photographic company that she had always fantasised about. Her husband was a welder, and like her, he had changed occupations in quest of higher compensation. During the epidemic, Ms. Moya, age 38, decided to become one of the millions of Americans who started their own small company.
However, as of today, Ms. Moya is beginning to wonder if her goal can ever become a reality. The household income has decreased, while at the same time, the expense of living has increased. Because of the pain that inflation has caused them, her clients are not splurging on the boudoir picture sessions that are her speciality. She is worried about being able to make the payments on her studio in Fort Worth.
She referred to it as a “moment of empowerment” in her statement. “There was a moment where we said, ‘We’re not going back, and we’re not going to take this any longer,’ but the truth is yes, we are, because how else are we going to pay the bills?”
However, Ms. Moya will not be going back to working as a waitress any time soon. And there is a school of thought among economists that suggests employees are likely to keep some of the gains they have achieved in the past few years.
“There are good reasons to think that at least a chunk of the changes that we’ve seen in the low-wage labour market will prove lasting,” said Arindrajit Dube, a professor at the University of Massachusetts who has researched the pandemic economy. “There are good reasons to think that at least a chunk of the changes that we’ve seen in the low-wage labour market will prove lasting.”
The findings paint a different picture from the one that is commonly told about the “great resignation,” which is a phenomena in which individuals left their jobs entirely. The vast majority of them left in order to accept new employment, the majority of which paid higher, or, like Ms. Moya, to launch their own enterprises. And while employee turnover grew across practically all sectors of the economy, it was more prevalent in low-wage service sectors, where workers have historically had little room for negotiation.
