The Great Resignation is Over (2023)

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Previously on “The Daily.”

Over the past two years, tens of millions of Americans quit their jobs.

It was a tidal wave that became known as the Great Resignation.

Now that era of quitting is over. I’m Natalie Kitroeff. Today my colleague Ben Casselman on what its end means for workers. It’s Wednesday, July 12.

Hi Ben.

Natalie.

Ben, this is so fun. This is the first time we’ve done a together.

I’m genuinely really excited.

I can’t believe it.

Reunited, it feels so good.

So back in 2021, you did an episode with us where we heard from all of these people who had left their jobs. And then just last week, I saw that you wrote a story saying that that phenomenon, the Great Resignation, had ended. What did you mean by that?

So what I mean by that is that we had this period coming out of the pandemic of just rapid fire job switching across the American economy. And we can measure this directly because the government, the Bureau of Labor Statistics, measures how many people quit their jobs every month.

And that measure went through the roof coming out of the pandemic, and it stayed through the roof for months and months to an precedented level. At the peak, $4.5 million Americans a month were quitting their jobs. But now it is coming down, and it has gotten pretty close to where it was before the pandemic. So I think we can safely say that the Great Resignation, whatever it was, is over.

And what are we supposed to make of that? Why do we think that’s happening?

Well look, I mean one possibility is that workers moved around and found jobs that they were happier with and that paid better, so they don’t need to keep moving because they got a job that they like. And I’m sure that for some people that is what happened. But I think what’s more likely in the economy as a whole is that a lot of workers are starting to feel nervous.

We’ve been hearing for a long time now about the risks of a recession. I mean, we’ve talked about this on “The Daily” many times. Workers are aware of that, they’re hearing these warnings. They’re seeing that the economy is not booming along the way it was coming out of the pandemic. And so I think we’re starting to see evidence of workers getting just a little bit more cautious and not feeling like, oh what, they can just walk out the door and get something else.

It sounds to me like, honestly in order to understand why the Great Resignation is over, we kind of need to understand why it happened in the first place. Can you explain that to us?

Yeah, I’m glad you asked because I think that this phrase — Great Resignation — honestly, I’ve never liked it very much because I think that it calls to mind a picture in a lot of people’s heads that really doesn’t reflect what was going on in reality.

How so?

You know I think you hear great resignation and you think about people who are privileged, white collar professionals, who after the pandemic are rethinking their priorities. Or it’s young people who just want to go and live van life in the country. And look, I think that did happen. We saw quits rise pretty much across all industries and all demographic groups. But that’s not most of it. That’s not where it’s concentrated. To a large degree, the Great Resignation was a phenomenon of low wage workers, of service workers, in hospitality, in leisure, in retail. That’s where the weight of the quitting was.

And can you remind us why they were quitting?

So, I think it helps to wind back the clock a bit to the pandemic period.

We saw businesses shut down, especially in-person businesses, and lay off millions of workers, most of whom go on unemployment benefits, which expanded significantly in the pandemic. So that by the time we get to the spring of 2021 and vaccines are being rolled out, businesses are reopening, people are going back to restaurants and hotels and retail outlets. All these businesses suddenly need workers.

Right.

And for workers who were in these industries at that time, this was a pretty miserable moment, right? This is when it still feels really unsafe in a lot of cases to do this work. It’s a time where they’re being asked to enforce mask mandates, and are often getting a lot of pushback on that. And look, that’s only one of the reasons why the supply of workers was constrained.

Child care was still disrupted, so a lot of people couldn’t return for that reason. The borders were still by and large sealed, so we lost out on what is usually a major source of low wage work in this country, which is immigration. And so, for all of these reasons, we had a ton of demand for workers as we all rushed back out into the world and not that much supply.

But Ben, can I ask you, what about unemployment benefits that people were getting during and after the pandemic? How did that play into any of this?

It’s a really important question. One of the major policy tools that the government used during the pandemic was expanded unemployment benefits. For a while, there you were able to get an extra $600 a week in unemployment benefits. And this was done explicitly to try to give people an option not to work, right? This is at the heart of the pandemic. We wanted people to be able to stay home and be safe.

Right.

Those benefits continued in a somewhat reduced form after the economy began to reopen, and we began to hear a lot of businesses complaining that they couldn’t find workers because the workers were out there receiving unemployment benefits. And we certainly know that unemployment benefits did give workers some more leverage in this situation, right? They didn’t have to come back to the first job that was offered to them because they had a way of paying their rent and of buying food.

But we also know that the quitting that we’ve been talking about here actually continued to increase after those extra benefits expired, after they went away. What we’re seeing is workers quitting their jobs to go, in some cases, start businesses of their own, or to change into other industries that maybe are more attractive to them at that point. Or in many cases, to go into other businesses in their same industry. And so, what we’re talking about here, this Great Resignation period, it can’t be about unemployment benefits, right? Because it continued to grow after the unemployment benefits went away.

What does that tell you, Ben? What was happening in the economy that explains that?

What it tells me is that this was still a moment of really intense demand for workers, and that it became a real moment of worker power. These businesses wanted workers, they needed workers. And a lot of workers had moved on and gone on to other industries. And as a result, the workers who were left behind had some leverage, they had the ability to say, I’m not going to come work for you if you’re going to pay me the $12 an hour that you were paying me before.

Right.

I think there’s also an important element of psychology, of workers sort of discovering a power that maybe on some level they already had, but now they knew about. Once they had quit a job to go take another job, maybe it’s not as hard to do it a second time. Maybe they can go to their boss and say, listen you know how you hired me away from somewhere else?

Someone else can do that. So you better give me that dollar an hour raise. I think we had a real sort of bubbling up of worker consciousness that they held some power in this negotiation.

And that fundamental power shift, does it have an impact on the economy? Can you see it play out?

You can see it clear as day. The most obvious place is in wages. What we saw in this period was pay for these low wage workers going way up. I think over a two year period we saw something like a 28 percent increase in hourly earnings for hotel and restaurant workers. Which shows that employers really needed workers and they were willing to pay for them.

And Ben, put that into context for me. How big of a deal is that increase in wages given what we have seen over the last several decades in the US economy?

It’s a sea change. I’ve been covering economics for 15 years now. And for as long as I’ve been covering this, we’ve been talking about wage stagnation and how wages, especially for the lowest wage workers, have just been stuck. And all of a sudden they came unstuck. We saw wages for low wage workers rise faster than for any other group.

Wow.

And it actually reduced in a significant way the inequality, the gap between what the highest earners make and what the lowest earners make. Economists have been studying this, and over the last couple of years, we’ve reversed about a quarter of the 40 year increase in earnings inequality. That’s obviously not 100 percent of it or close to it, but it’s a really big bite to take in just a two year period.

And now, you’ve told us the quit rate is almost back to where it was pre-pandemic. This period, this Great Resignation, is over.

Yeah, the period of quitting, the Great Resignation period, seems to be by and large behind us. And so I think that the logical question now is whether this moment of worker power is also behind us.

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We’ll be right back.

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Ben, before the break you hinted at the fact that the increase in earnings, especially among low wage workers, might not last with the end of the Great Resignation. Tell me about that.

So all of these gains that we’ve seen, they’ve basically come as a result of a really hot labor market, right? Of lots of demand for workers, outstripping supply, giving workers leverage. But inevitably at some point the labor market will not be so strong, right? Unemployment will rise, we’ll hit a recession, whenever that may be. And nothing has happened to lock in these gains so that these gains will persist beyond just a strong labor market.

What could we have done?

So your answer to that, of course, is going to depend on your political perspective, your approach to the economy, right? Folks on the left are going to point to things like the minimum wage. Wages across the country are now far above in practice. Wages are far above the federal minimum wage of $7.25. But the federal minimum wage hasn’t gone up. And so, the moment that the economy gets weaker, right, employers could just try to pay that $7.25 an hour minimum wage again.

We haven’t seen policies to make it easier for workers to organize. We haven’t expanded unemployment benefits, for example, in a way that gives workers an opportunity to hold out for a better job if they lose their job. So we haven’t seen sort of any of the kind of policies that folks on the left think would help strengthen workers’ power in some more enduring way. And we haven’t seen any of the policies that folks on the right might point to either.

As a general rule, people on the right are less likely to see inequality per se as a problem. But there are certainly steps that they would like to see the government take that they argue would help workers over the long run, things to make it easier to start a business, things to make it easier to change jobs by lowering licensing requirements, for example.

We haven’t seen those kinds of policies either. And so what we’re left with here is a system that just depends on the strength of the economy, that isn’t dependent on any policies that would help lock in these gains.

What you’re saying is that neither side, not the left, not the right, no one has been able to take advantage of this moment where workers had real leverage to put in place policies that would have made some of these gains more permanent.

Yeah, you might think that this would have been the moment to do that. If you ever think it makes sense to raise the minimum wage, it would make sense in a period where real world wages have outstripped the minimum wage to such a degree that it literally wouldn’t cost businesses anything to raise the minimum. If you think that there are policies that would help workers, it sort of makes sense to put them into a place during a good economy, not to wait around and try to do it in the middle of a recession when businesses are trying to survive. But we haven’t done any of that.

And why not?

Well look, if you talk to folks in the Biden administration, for example they’ll point to all sorts of things that they’ve done that they would argue will help the economy and help workers in the long run, right? Their infrastructure bill, for example. All of these kinds of policies that they argue will make the economy stronger.

But a lot of things that they tried to do in terms of raising the minimum wage, in terms of unionization policies, those are things that didn’t get through Congress. And the idea of gridlock in Congress is hardly new and not something I think you and I are going to solve here. But it’s a reality that has limited what the government has been able to do during this period.

So Ben, where do we go from here?

So a lot is going to depend on the economy. And right now, the labor market remains strong. The unemployment rate is still very low. We’re still adding jobs at a pretty steady rate. Wages are still rising. They’re no longer rising faster for workers at the bottom of the pay scale, but they’re still rising for pretty much everybody. So as long as that continues, we have no reason to think workers will lose the gains that they’ve already made, even if they’re not continuing to make huge additional gains.

But look, the economy is vulnerable. Forecasters have been predicting a recession for months now and it keeps not coming, but at some point it may. The Fed has been raising interest rates aggressively. We’ve seen certainly a slowdown in the economy, even if it’s, at this point, still in decent shape. And look, there will be a recession one of these days. And because we don’t have anything that has sort of locked in these gains, when that happens, there’s a real possibility that a lot of what workers have seen here will disappear, right? If all of their leverage came from this huge demand for workers, then it’s going to disappear when that demand goes away.

So in the economy that we’re in now, where there is a lot of talk of a coming recession, and where there’s no policies on the left or the right that would keep the concrete gains going, what happens to the other piece of this that you were talking about? This new sense of consciousness among workers, that feeling of worker power?

I think in some ways, that’s the most interesting question here. It’s also in some ways the hardest to answer, right? Because it’s hard to measure. But I think there is a real sense that this period has been a wake up call for workers and a moment of real mobilization. You see that in a direct way, in unionization. We’ve seen unionization drives at Starbucks and at Amazon. We see strike activity, whether it’s the Hollywood writers strike that’s going on now or a UPS strike that’s looming on the horizon.

But we also see it not just in this classic organized labor way, but also just in the day-to-day activity and awareness of individual workers. I talk to a lot of low wage workers. And a lot of them tell me that this period has changed the way they think about their work and their role in the workplace.

They’ve had this moment of realizing, I can go to my boss and I can say, if you don’t give me a raise, I’m going to go down the street and get a different job, get a better job. And once that awareness exists, it changes the way they think. And it is a lesson that they say they’re not going to forget anytime soon.

But will they be able to actually use those lessons if the economy goes south. I mean, if things get really desperate, if there are fewer jobs out there, how do workers use this consciousness?

Yeah, I think it’s a really fair question. If most of this power came from an ability to go to your boss and say, give me a raise or else, what happens when the boss chooses or else? What happens when the boss says fine, we were about to lay people off anyway, so walk away? If we haven’t seen any real structural shifts here, and if we haven’t seen any real policy shifts, then I don’t know why we should expect these gains to last in a period of high unemployment, of few job opportunities, in a real recession.

That makes me wonder, Ben, what is the long term impact, then, of the Great Resignation?

So look, workers right now are still being paid significantly better, particularly low wage workers, significantly better than they were before the pandemic.

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There’s a universe here where at the very least workers hold on to some of those gains. Maybe they don’t make further gains, but at least we see a higher floor for a lot of workers going forward. And so, has the Great Resignation changed things in a lasting way? Maybe, if you talk to some workers, if you talk to some union organizers, they’ll argue yes. But I think the test of that is going to come whenever that recession hits, and history tells us that it will hit someday. Then we’ll see whether these gains hold up or if they disappear just like the Great Resignation has.

Ben, Thank you so much.

Thank you, Natalie.

We’ll be right back.

Here’s what else you need to know today. A federal judge cleared the way for Microsoft to buy Activision Blizzard, blocking an attempt by the Federal Trade Commission to delay the merger. The FTC failed to convince the judge that it could prove that the merger between Microsoft — which makes the Xbox — and Activision — which makes video games — would reduce competition and hurt consumers. The ruling was the latest setback for the FTC, which has tried to become more aggressive in policing big tech but has not yet won any major victories in court. And —

On Tuesday, the governor of Vermont, Phil Scott, warned residents that even though the rainfall that had pummeled the state had subsided, the flooding still isn’t over.

Rivers in the state reached some of their highest levels on record, while the authorities worked furiously to reach people stranded in remote mountain towns. By Tuesday, they had rescued at least 117 people from cars and homes. Today’s episode was produced by Shannon Lin and Carlos Prieto with help from Michael Simon Johnson. It was edited by Lisa Chow with help from Marc Georges. Contains original music by Marian Lozano and was engineered by Alyssa Jane Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

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That’s it for “The Daily.” I’m Natalie Kitroeff. See you tomorrow.