Tens of millions of Americans have changed jobs over the past two years, a tidal wave of layoffs that reflected — and helped create — a rare moment of worker power when workers demanded higher wages and employers who had little Staff decreed, this often yielded to them.
But the “great resignation”, as it was called, seems to be coming to an end. The rate at which workers are quitting their jobs voluntarily has fallen sharply in recent months — although it edged up in May — and is only slightly above levels before the pandemic disrupted the U.S. jobs market. In some industries where sales were highest, such as hospitality and retail, layoffs have fallen back to pre-pandemic levels.
The question now is whether the gains made by workers during the big exit will endure — or whether employers will regain clout, especially if, as many forecasters expect, the economy slides into recession sometime next year slips off
The pendulum may already be swinging back in the employers’ direction. Wage growth has slowed, particularly in low-paid service occupations, where it rose sharply when turnover peaked in late 2021 and early 2022. While employers still complain about labor shortages, they report that it has become easier to hire and retain workers. And those who change jobs are no longer getting the inflated pay increases that have become the norm in recent years, according to payroll firm ADP.
“You don’t see the signs that say ‘$1,000 signing bonus’ anymore,” said Nela Richardson, ADP’s chief economist.
Ms Richardson likened the job market to a game of musical chairs: as the economy began to recover from the pandemic-related shutdowns, workers were free to move between jobs. But with recession warnings in the air, they’re getting more and more nervous about being caught out of work when fewer are available.
“Everyone knows the music is going to stop soon,” Ms. Richardson said. “That will make people stay a little longer.”
Aubrey Moya joined the big resignation about a year and a half ago when she decided she was fed up with the low wages and grueling work of waiting tables. Her husband, a welder, was making good money – he too had switched jobs in search of better pay – and they decided it was time for them to open the photography shop they had long dreamed of. Ms Moya, 38, was among the millions of Americans who started small businesses during the pandemic.
Today, however, Ms. Moya is wondering whether her dream is sustainable. Her husband earns less money and the cost of living has increased. Her inflation-stricken clients don’t indulge in the boudoir photo sessions she specializes in. She’s afraid to make payments for her Fort Worth studio.
“There was a moment of empowerment,” she said. “There was a moment where we were like, ‘We’re not going 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 won’t be back as a waitress just yet. And some economists believe workers are likely to keep some of the gains made in recent years.
“There’s good reason to believe that at least some of the changes we’ve seen in the low-wage labor market will prove sustainable,” said Arindrajit Dube, a University of Massachusetts professor who has studied pandemic economics.
The Great Retirement has often been portrayed as a phenomenon where people give up their jobs altogether, but the data tells a different story. Most of them quit to take on other, usually better-paying jobs – or, like Ms. Moya, to start a business. And while revenue increased in virtually every industry, it was concentrated in low-wage services where workers generally had little influence.
For these workers, the rapid reopening of the local economy in 2021 presented a rare opportunity: restaurants, hotels and shops needed tens of thousands of employees, while many people still shied away from jobs that required face-to-face contact with the public. And even as concerns about the coronavirus subsided, labor demand continued to outstrip supply, in part because many people who had left the service industry were reluctant to return.
The result has been an increase in wages for workers at the bottom end of the earnings scale. The average hourly wage for basic restaurant and hotel workers increased by 28 percent from the end of 2020 to the end of 2022, far outpacing both inflation and overall wage growth.
In a recent paper, Mr. Dube and two co-authors found that after four decades of progressive enlargement, the income gap between workers at the top end of the income spectrum and those at the bottom was gradually narrowing: in just two years, the economy grew by about one Reverse a quarter of the increase in inequality since 1980. They found that much of this progress was due to the increased ability – and willingness – of workers to change jobs.
Wages for low-wage workers are no longer increasing faster than for other groups. What is important, Mr Dube believes, is that low-wage workers have not lost ground over the last two years and have achieved wage increases that have more or less kept pace with inflation and higher earners. This suggests that attrition may be falling not only because workers are becoming more cautious, but also because employers have had to raise wages and improve working conditions to the point where workers are reluctant to quit.
Danny Cron, a restaurant waiter in Los Angeles, has changed jobs twice since returning to work following the lifting of pandemic restrictions. At first he worked in a bar, where his hours were “brutal” and the most lucrative shifts were reserved for the waiters who sold the most margaritas. He quit to work at a large chain of restaurants that offered better opening hours but little scheduling flexibility — a problem for Mr. Cron, an aspiring actor.
So last year, 28-year-old Mr. Cron quit again and took a job at Blue Ribbon, an upscale sushi restaurant, where he’s making more money and better accommodating his acting schedule. The strong post-pandemic job market, he said, gave him the confidence to keep changing jobs until he found one that suited him.
“I knew there were plenty of other jobs out there, so I felt less committed to one job out of necessity,” Mr. Cron wrote in an email.
But now that he has a job he likes, he feels little urge to keep looking – partly because he feels the job market has weakened, but mostly because he’s happy where he is.
“Finding a new job is a lot of work, and training for a new job is a lot of work,” he said. “So once you’ve found a good service job, you’re not going to give it up.”
The labor market remains strong, unemployment is below 4 percent and job growth continues, albeit at a slower pace than in 2021 or 2022. But even optimists like Mr Dube acknowledge that workers like Mr Cron could lose leverage if companies start to mass job cuts.
“It’s very tenuous,” said Kathryn Anne Edwards, a labor economist and policy advisor who has studied the role of dismissal in wage growth. A recession, she said, could wipe out the gains wage workers have made in recent years.
Still, some workers say one thing has changed more profoundly: their behavior. After being hailed as an “essential workforce” — and receiving bonuses, sick pay and other perks — early in the pandemic, many people in hospitality, retail and related occupations say they are disappointed that companies have scaled back services, when the emergency abated. The big resignation, they say, was partly a reaction to that experience: they are no longer willing to work for companies that don’t value them.
Amanda Shealer, who runs a shop near Hickory, North Carolina, said her boss recently told her she needed to find more ways to house hourly workers or they would leave to work elsewhere. Her answer: “I will too.”
“If I don’t feel like I’m supported and I feel like you’re not taking my concerns seriously and you’re dumping more and more on me, I can do the same,” Ms Shealer, 40, said. “You no longer have loyalty to a company because the companies no longer have loyalty to you.”