The Great Resignation was a period, primarily beginning in early 2021, when a significantly higher-than-average number of workers voluntarily resigned from their jobs. This phenomenon, rooted in the broader field of labor economics, saw millions of individuals re-evaluating their relationship with work, leading to a substantial shift in the global workforce. The Great Resignation represented a unique moment where factors like job satisfaction, compensation, and work-life balance gained unprecedented prominence in individual career decisions. This period highlighted the dynamic nature of employment trends and their far-reaching economic implications.
History and Origin
The term "The Great Resignation" was coined by Anthony Klotz, a professor of management, in May 2021, who anticipated a significant wave of voluntary departures from jobs19, 20, 21. His prediction quickly gained traction as official data began to show a surge in quits across various sectors. This widespread voluntary movement was influenced by several factors that coalesced during the COVID-19 pandemic. Remote work became a necessity for many, offering a new perspective on work-life integration. Simultaneously, frontline workers faced unprecedented pressures, while many individuals experienced shifts in personal priorities, leading to a re-evaluation of their career paths and values17, 18. For instance, the U.S. Bureau of Labor Statistics (BLS) reported record numbers of Americans quitting their jobs, with the "quits rate" reaching its highest levels since data collection began in 200015, 16.
Key Takeaways
- The Great Resignation refers to the mass voluntary exodus of workers from their jobs, primarily starting in early 2021.
- It was characterized by a significant increase in the "quits rate," indicating a higher propensity for workers to leave their current employment.
- Key drivers included a re-evaluation of priorities, desire for better work-life balance, demand for improved compensation and benefits, and the rise of remote work opportunities.
- The phenomenon impacted various industries differently, with sectors like hospitality and retail experiencing particularly high resignation rates14.
- It highlighted a shift in the power dynamic between employers and employees, giving workers more leverage in the labor market.
Interpreting The Great Resignation
Interpreting The Great Resignation involves understanding the underlying motivations behind the mass exits and their impact on various economic indicators. The surge in resignations often correlated with a robust job market, where ample opportunities allowed individuals to seek better roles. When the "quits rate"—the number of voluntary separations as a percentage of total employment—rises significantly, it can signal worker confidence in finding new employment, potentially with better wage growth or improved working conditions. Conversely, a low quits rate might indicate a stagnant job market where workers feel less secure in leaving their positions. The phenomenon also prompted companies to re-evaluate their strategies for employee retention and talent acquisition, adapting to evolving employee expectations regarding flexibility, purpose, and compensation.
Hypothetical Example
Consider "FlexiCorp," a mid-sized tech company that historically experienced a typical annual voluntary turnover rate of 10%. Following the onset of the Great Resignation, FlexiCorp saw its turnover rate jump to 25% within a single quarter. This increase meant that one in four employees were leaving, significantly higher than their usual rate.
For example, if FlexiCorp had 200 employees at the start of the quarter, they would typically expect 20 resignations over a year. However, during this period, they experienced 50 resignations in just three months. This high volume of departures led to a substantial loss of institutional knowledge and increased workload for remaining staff. FlexiCorp's human resources department responded by analyzing employee feedback surveys, which revealed widespread desires for more flexible hours, increased opportunities for career development, and a review of salary structures to match rising market rates. In response, FlexiCorp implemented a hybrid work model, invested in skill-building programs, and conducted a comprehensive compensation review, aiming to reduce the negative impact on human capital.
Practical Applications
The Great Resignation has had several practical applications and implications across various economic and business spheres. For employers, it necessitated a re-evaluation of traditional workplace models, leading to increased adoption of flexible work arrangements, including hybrid and fully remote work policies. Companies have also focused more intently on improving job satisfaction and fostering positive workplace cultures to enhance employee retention.
F12, 13rom an economic perspective, the mass resignations contributed to significant shifts in the labor market. The U.S. Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) became a closely watched indicator, providing insights into job vacancies, hires, and separations, including voluntary quits. Da10, 11ta from JOLTS showed a consistently high number of quits during this period, reflecting workers' increased bargaining power and their willingness to seek better opportunities. Th9is trend also influenced wage growth as companies competed for dwindling talent pools. The International Monetary Fund (IMF) has also analyzed how such labor market shifts, including changes in productivity, can impact broader economic performance, emphasizing the importance of efficient resource allocation in the face of evolving workforce dynamics.
#7, 8# Limitations and Criticisms
While widely recognized, the narrative of The Great Resignation has also faced limitations and criticisms. Some economists and researchers suggest that the elevated quit rates observed during this period were not entirely unprecedented and align with patterns seen during rapid economic recoveries following recessions. Fo5, 6r example, the Federal Reserve Bank of San Francisco published research arguing that "Great Resignations" are common during fast economic recoveries, where a strong labor market enables workers to find new jobs more easily. Th3, 4is perspective suggests that while the scale was significant, the underlying dynamics of workers seeking better opportunities in a tight job market are not necessarily a radical departure from historical trends.
Critics also point out that the phenomenon was not uniform across all sectors or demographics, with certain industries and younger, less-educated workers experiencing higher quit rates than others. Fu1, 2rthermore, some individuals who quit their jobs reportedly experienced regret or dissatisfaction with their new roles, highlighting that a change of employment does not automatically guarantee improved job satisfaction or financial well-being. The increased turnover also presented challenges for businesses, leading to higher recruitment costs and potential disruptions in consumer spending due to labor shortages and supply chain issues.
The Great Resignation vs. Quiet Quitting
The Great Resignation and Quiet quitting are distinct, though related, concepts reflecting evolving employee attitudes toward work. The Great Resignation refers to the widespread trend of employees voluntarily leaving their jobs en masse, seeking new employment or exiting the traditional workforce altogether. It is characterized by active departures and a measurable increase in the "quits rate" in official labor statistics. The primary motivation is often to find better pay, improved benefits, greater work-life balance, or a different career path.
In contrast, quiet quitting describes a phenomenon where employees remain in their jobs but disengage from going above and beyond their defined roles. Instead of resigning, they commit only to the minimum requirements of their job description, psychologically detaching from additional responsibilities, company initiatives, or the pursuit of career advancement. While The Great Resignation represents a physical exit from an employer, quiet quitting signifies a mental or emotional withdrawal, often in response to burnout, lack of recognition, or perceived exploitation. Both terms reflect a re-evaluation of the role of work in one's life, but they manifest in different behavioral outcomes within the economic cycles of the labor market.
FAQs
What caused The Great Resignation?
The Great Resignation was caused by a combination of factors, including pent-up desires for career changes that were delayed during the pandemic, widespread burnout, a re-evaluation of personal priorities and work-life balance, and increased opportunities for remote work and better compensation as the labor market tightened.
How did The Great Resignation impact the economy?
The Great Resignation led to significant shifts in the labor market, contributing to labor shortages in certain sectors, increased competition for talent acquisition, and upward pressure on wage growth. It also prompted businesses to re-evaluate their compensation, benefits, and workplace culture to attract and retain employees.
Is The Great Resignation still happening?
While the peak intensity of The Great Resignation, characterized by record-high quit rates, has subsided, the underlying trends of workers prioritizing work-life balance, flexibility, and meaningful work continue to influence the employment landscape. The labor market remains dynamic, with ongoing discussions around employee empowerment and evolving workplace expectations.
Who was most affected by The Great Resignation?
Initially, The Great Resignation saw high quit rates among mid-career employees and workers in industries like hospitality, retail, and healthcare. It particularly affected blue-collar workers who sought better wage growth and working conditions. However, the phenomenon touched various segments of the gig economy and traditional industries.