Harry Styles convinced a woman to quit her job with the help of fans during his concert tour on Wednesday.
The woman, who said she was “unhappy” at her marketing firm, held up a sign that read, “Tell me to quit my job.”
Millions of Americans are quitting their jobs in the “Great Resignation,” which has contribued to labor shortages across the US.
Catherine Dugoni needed a push to quit her pandemic-era job, which she had been deliberating with close friends and family for months. Then came a chance encounter with Harry Styles.
The international pop star spoke to 23-year-old Dugoni at a concert in Sacramento on Wednesday and, with the help of his legions of fans, convinced her to quit her job.
The now former marketing associate graduated from UC Berkeley in 2020 amid the COVID-19 pandemic and has been working at a marketing firm remotely since. Dugoni had held-off resigning from her job for a while, but was aiming to finalize her decision by the start of 2022.
“It’s been really hard this last year with the pandemic and working from home and being fresh out of college,” Dugoni told SFGATE. “My first job is completely remote … and having zero interaction with people. The job’s like great, you know, the people are nice, I love the company, but it just it wasn’t the right fit.”
Dugoni, who scored floor tickets to Styles’ November 10 show a couple rows back from the stage, wrote two signs, including one that said, “Tell me to quit my job.”
Harry Styles has been known to interact with his fans in-between sets during his “Love on Tour,” with people in the crowd holding up paper signs to catch his attention, reading phrases ranging from, “punch me in the face,” to “help me come out?”
Styles, who read her sign, asked Dugoni what she does for a living, according to video recorded during the interaction. “I work in marketing but it makes me sad,” she replied.
“What do we think Catherine should do?” Styles asked the crowd, who were yelling “quit!” “Do you want to work to live or live to work?”
The following day, Dugoni put in her two weeks’ notice at her marketing job, according to SFGATE, with support from her bosses.
Dugoni’s decision comes as millions of workers across the US in various industries quit their jobs amid the pandemic in what has become known as the “Great Resignation.” According to the Bureau of Labor Statistics, over 4.4 million Americans quit their job in the month of September alone, continuing a six-month streak for the highest number of quits on-record.
“This is the sign I needed from the universe,” Dugoni said to SFGATE. “That’s why I ended up giving my two weeks’ notice is because I’m someone who will ruminate and think on things for weeks and weeks and weeks and then just decide, ‘You know what, I’m, I’m tough enough. I’ll just stick it out,’ until something like this happens.”
A Now Hiring sign hangs near the entrance to a Winn-Dixie Supermarket on September 21, 2021 in Hallandale, Florida.
Joe Raedle/Getty Images
So-called labor shortages are still cropping up across the country, as employers struggle to staff up.
But Stinson Dean, CEO of Deacon Lumber, told Bloomberg that his company is overstaffed.
He says that’s because he doesn’t overwork his team and he pays them a reasonable wage.
Labor shortages have stuck around for months now, as businesses continue to say they can’t find enough workers. But one lumber CEO say’s his company is “overstaffed” – and he knows why.
“We have a very happy workforce and we’re not working everyone to death because we refuse to pay higher wages,” Stinson Dean, the CEO of Deacon Lumber, told Bloomberg’s Joe Weisenthal and Tracy Alloway on the Odd Lots podcast.
The key to hiring, said Dean, may be understanding that employees have a newfound leverage, and accepting that it’s time to be “pro-employee.”
During a wave of newfound worker power, cleaning companies are turning down projects and canceling on customers because they don’t have enough workers. A childcare company in California is shuttering because it can’t hire. One jewelry store owner said that her husband had to come out of retirement to work, because she’s so understaffed.
Some businesses have compensated by working their current workforces longer and harder. But that might only be aggravating shortages, since it leads to rampant burnout among workers, who then continue the trend of quitting.
“I just think it’s such a short-sighted and stubborn practice by business owners to cry and complain about the cost of labor and take their most loyal, longest tenured, dedicated employees and work them down to the bone,” Dean added.
It’s a matter of meeting the labor market and employees where they’re at, he says. The past year has been one of rethinking work, and what people want out of it. It’s also a period where workers are taking action on changing their working conditions. For some, that’s meant simply just quitting their jobs. In August, the last month that the Bureau of Labor Statistics has collected data on, over 4 million workers quit their jobs; it marked the fifth month of near record high quits.
“We accept the fact that this economy is pro-employee,” Dean said. “And if you’re not good at that part, you just won’t have a business, or you’ll be running every aspect of the business yourself, because no one would want to work for you.”
Dean isn’t the only one to find himself overstaffed during a moment of chronic shortages. He notes that $15 is what he calls a “clearing wage” – even though it’s still not law as the federal minimum wage, which has remained stagnant at $7.25 for 12 years.
Fellow business owners who haven’t struggled with staffing have boosted wages into the $15 realm, Insider’s Grace Dean reports. One MaidPro franchisee in Florida, Andrea Ponce, told Insider she was also overstaffed after she brought wages up from $11 to $14 in May.
In June, Iowa coffee shop Greene Bean Coffee raised wages to $15 an hour. Owner Rich Osborne told Insider he got about 50 applications in two weeks.
“That kind of upended the entire narrative out there that people don’t want to work after the pandemic anymore,” Obsborne said. He said that “smart people” realize investing in employees is an investment in business, and that he trusts his workers to run his business.
And for Dean, keeping pay high and conditions good is also a matter of business: “It’s great business practice to pay lower level employees and treat them as if they’re revenue producing high commission salespeople.”
In August, more than 4 million workers quit their jobs – marking the fifth month in a row of record quits.
It’s a trend that’s only accelerated and shows no signs of stopping as the pandemic continues on.
Workers are likely quitting over work conditions, pay, the virus itself, or rethinking their own lives.
The number of people quitting reached yet another record high in August, with about 4.3 million Americans leaving their jobs behind – especially in retail, food services, and hospitality.
That means nearly 3% of the US workforce quit in August, according to Tuesday’s data release from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Summary. It’s the fifth month in a row that broke the record and the highest since the BLS started collecting this data in 2001.
Employers scrambling to hire and bemoaning labor shortages likely won’t see relief as, workers show no sign of stopping one of the pandemic’s hottest trend: Quitting your job.
Even as the country added a paltry 366,000 jobs in August – far below economists’ expectations – and an equally dismal 194,000 jobs in September, workers seemed to have no qualms about leaving the jobs they already had. Those smaller gains were driven by the rise of the Delta variant, as the pandemic’s stronghold on the economy and employment continued with increasingly high case loads. But they also signal that workers are increasingly exercising their power and feel comfortable quitting – which isn’t a bad thing economically.
That tracks with who’s quitting: It seems that low-paid, mostly in-person roles saw the largest number of workers quitting. For example, departures were driven by workers leaving accommodations and food services, where the number of workers quitting reached their own series high; the quits rate in that industry was 6.8%, over double the average rate across all industries.
Retail trade also saw its own series high, with the quits rate coming in at 4.7%. Both industries rely heavily on in-person service, which has taken its own dip during the pandemic, and both have struggled with anecdotal labor shortages. Many workers require more – whether it’s benefits, higher wages, or better working conditions – to put their lives on the line for those roles, economists have told Insider.
A survey of 2,099 respondents by jobs site Joblist found that nearly three-quarters of all respondents were thinking about leaving their jobs during July, August or September, Insider’s Grace Dean and Madison Hoff reported. That number was the highest for hospitality workers, with 77% thinking about quitting.
Workers quitting can also lead to cyclical short staffing, causing burnout amongst remaining workers. A September note from Bank of America researchers said that some employers were addressing the labor shortage by simply leaning more on the workers they have. But, as the report’s authors wrote, “this is not sustainable: you can only speed up the treadmill for so long.”
So why’s everyone quitting?
There’s no one answer as to why workers are turning their backs on jobs. Tuesday’s data release doesn’t capture people who are job switching out of one industry into another or into a higher paying role, as Indeed economist Nick Bunker pointed out on Twitter.
The number of people not working due to either caring for themselves or someone else sick with coronavirus symptoms skyrocketed over the summer. To make matters worse, childcare centers have been closing again due to increased case loads.
In August, Daniel Zhao, a senior economist at Glassdoor, told Insider that 3.7 million more people would have quit if there’d been no pandemic – those “missing quits” have continually shrunk as workers leave in droves and make up for lost time.
And then there’s the more existential answer. Organizational psychologist Anthony Klotz, who came up with the phrase the “Great Resignation,” previously told Insider that humans step back and ask existential questions when they come in close contact with death and illness – something tragically abundant throughout the pandemic. That can lead to “life pivots.”
“One hopefully silver lining of this horrible pandemic would be if the world of work transitioned to a more healthy, sustainable place for employee wellbeing,” Klotz said.
For four months in a row – a third of the year – a record number of Americans quit their jobs.
It’s like nothing else we’ve seen in two decades. So when organizational psychologist Anthony Klotz coined the phrase “the Great Resignation,” it resonated across the workforce – and media. He said it took off after he was quoted by Bloomberg Businessweek on how to quit your job.
“I don’t know why I used the word ‘great’ and called it ‘the Great Resignation,'” he told Insider of his interview with Bloomberg, but said he had been using that phrase at home, when he was talking to his wife about what would happen to workers.
Klotz, an associate professor of management at May Business School at Texas A&M University, said he anticipated that it would be a huge resignation wave based on a few different things. First, not a lot of people quit their jobs during the pandemic; in August, Glassdoor economist Daniel Zhao told Insider that there were still 3.7 million “missing quits.” That basically means that, if not for the pandemic, 3.7 million more people would have quit their jobs by then.
So, probably a lot of people who wanted to quit just hadn’t yet; as Klotz anticipated, a rush of quits might be making up that deficit. Burnout, too, is weighing on many, especially in service jobs. Workers in the service industry have been leaving en masse, prompting employers to hike wages, benefits, and get rid of tips.
He was right: In July, the last month for which the Bureau of Labor Statistics published data, 3.98 million workers quit; that’s slightly lower than the record-smashing 3.99 million quits in April.
The profound element to the Great Resignation
It’s more than just “missing quits,” though. It’s an understatement to say that the past 18 months have changed how some people think about life, work, and what they want out of both.
Given work’s elevated place in American culture, Klotz said he knew the existential crisis of business was bound to lead to an existential crisis for workers.
“Especially in the United States, who we are as an employee and as a worker is very central to who we are as people,” Klotz said. But whether you were yanked from the office, or laid off, or experiencing burnout, you may have felt more removed from work – and able to try out “other elements” of life more.
“From organizational research, we know that when human beings come into contact with death and illness in their lives, it causes them to take a step back and ask existential questions,” Klotz said. “Like, what gives me purpose and happiness in life, and does that match up with how I’m spending my right now? So, in many cases, those reflections will lead to life pivots.”
Stories abound of workers taking the leap into new careers, or following their passions. For instance, Insider’s Phil Rosen profiled Dane Drewis, who left behind his job in finance to make music a full-time job. Respondents to an Insider survey that asked “Which of the following would attract you most in a job offer or incentivize expanding your job search?” ranked higher wages and remote flexibility the highest.
Employers, take note
This should create a moment of reflection for employers, according to Klotz.
“I think we are entering a period of time where companies are trying to figure out, ‘Who are we in this new world of work? What kind of schedule do we want to give our employees?'” Klotz said.
Economists have told Insider that current labor shortages might be due to employers not offering enough – whether in wages, benefits, or working conditions – to win back workers.
That marks a break from recent historical work trends. For five decades, wages have been declining. The increasing switch over to an independent contractor model and gig work leave many without benefits. The US still doesn’t mandate paid leave, and workers are at the mercy of their employers on whether they’ll get time off for everything from pregnancies to COVID-19 vaccines paid.
But one lingering question is how long the Great Resignation will stick around, or if it will ever end.
“Is this just a permanently raised rate of resignation? Or is it an inflection point, and we get back to normal?” Klotz said. “I think a lot of that’s going to depend on what we learn about who is quitting, why they are quitting, and how companies respond.”
He added: “One hopefully silver lining of this horrible pandemic would be if the world of work transitioned to a more healthy, sustainable place for employee wellbeing.”
Cristian Cardona was a shift manager at a corporate-owned McDonald’s in Orlando, Florida, until he left the fast-food chain a few months ago.
He was one of 722,000 restaurant and hotel workers who quit in June, according to data from the Bureau of Labor Statistics, the highest quit level for these workers during the pandemic and the second-highest level since December 2000, the first month the Job Openings and Labor Turnover Survey series was tracked. Openings in the industry continue to increase and were over 1.4 million in June, according to the bureau.
“I believe workers are sick and tired of being underpaid, overworked, underappreciated by these companies, not being protected, having to risk their lives,” Cardona told Insider.
He and two other former food-service workers told Insider why they quit and what needed to change for them to come back.
Management and customers need to treat their employees better
The food-service employees we talked to all said that customers didn’t always treat them with respect, even though they put their health at risk during the pandemic.
“Especially now, no one goes to Starbucks to sit for an hour to relax,” said a former Starbucks barista to whom we granted anonymity and whose employment has been verified by Insider. “People go to Starbucks to get in and get out. So everyone has this frenetic energy when they come in, and they are extremely rude and demanding.”
He recalled one customer who called him “stupid” and “lazy.” He said she wanted a decaf Americano and didn’t tell him that she wanted steamed nonfat milk and stevia in it.
“She didn’t tell me all the things that she wanted, and then she literally expected me to read her mind. Like, that was her expectation. And when I didn’t, that’s when she berated me and belittled me,” he said.
“She will never remember to this day that interaction, but I’ll always remember that interaction and how little she made me feel,” he added.
Cardona similarly said customers weren’t always the friendliest.
“I noticed that customers were starting to act almost like they we’re taking stuff out on us,” he said. “They would get upset, angry. Sometimes, they would get violent, yell stuff at us, and it made it a hostile environment for us a lot of times.”
David Goldberg, who was an executive chef and general manager of 169 Bar in New York, said customers should treat restaurant and hospitality workers with respect. He left in November.
“I just felt like I’m anxious. I’m kind of stressed – I’m dealing with customers that don’t want to wear masks. I’m just kind of over it, and I’m just going to take a break,” Goldberg said.
He recalled one incident when the bar had only outdoor dining. One customer was told she couldn’t come in to use the bathroom without a mask but came in anyway.
When she left the bathroom, Goldberg came out of his office to talk to her.
“I said, ‘Listen you cannot come back. You got to leave. You’re endangering other patrons. You’re endangering the staff. You got to leave,'” he said. “What does she do? She calls her boyfriend, husband, and he comes down, threatening me with a fight. This is what people in the restaurant industry are dealing with.”
The former Starbucks barista said he had worked different restaurant positions but working at Starbucks was the worst and most demanding. He left without a new job to fall back on but now works in a different industry.
“Every day that I went to work, there was this significant dread that I would have because it’s nonstop,” he said.
“You are not just doing one job – you are doing probably four jobs, the labor of four people,” he added, giving the example of balancing working at the register and making drinks.
“They have to staff better, and they actually have to support their staff,” he said.
Insider’s Mary Meisenzahl reported Starbucks CEO Kevin Johnson said the company’s “retention numbers are good,” but some workers she talked to said there was high turnover.
The industry needs higher wages
Cardona, who’s also a member of the Fight for $15 and a union, started at McDonald’s in 2017, working his way up to manager. He made about $11 an hour, rising to $13 right before he left in June.
Cardona.
Fight for $15 and a Union
He said his pay didn’t reflect all the work and hours he was putting in as a manager. He now works at Universal Studios, which bumped up its starting pay to $15 on June 27.
“After a long search, I was able to find a job that gave me $15, which made me happy because it made it easier to survive. Going from $11 to $13 and then $15 is a big jump,” Cardona said.
While many people are quitting the industry, Cardona said he thought some might not be able to leave their jobs “because they’re in a trap where they are making starvation wages and they can’t afford to move or get transportation to a better job.”
McDonald’s recently increased its minimum pay to $11 to $17 an hour for entry-level workers and $15 to $20 an hour for shift managers, depending on location. Insider’s Kate Taylor reported that McDonald’s expected average hourly wages of company-owned restaurants to be $15 by 2024. CEO Chris Kempczinski said after the company’s announcement, “We’re getting close to full staffing levels.”
Goldberg agreed with Cardona that there needed to be a federal minimum wage of $15.
“People need to be paid what they’re worth, and it’s just not like that in the restaurant industry,” Goldberg said. He added that unemployment benefits weren’t keeping Americans from looking for work right now.
Cardona agreed. It’s not that people receiving unemployed benefits instead of working are “lazy” and don’t want to work, he said. Rather, it’s because “companies aren’t paying their workers enough,” he added.
In Florida, where Cardona worked, a minimum-wage worker would not be able to afford a two-bedroom rental apartment. A full-time worker would need to make $24.82 an hour to afford a two-bedroom and without spending more than 30% of their income, according to a report from the National Low Income Housing Coalition.
It seems that the food-service industry is taking note and raising wages. In May, average earnings for nonsupervisory workers in restaurants crossed $15. As the following chart shows, average earnings in full-service restaurants is over $17 and just above $13 for limited-service restaurants, such as fast-food places.
Goldberg said management in the industry needed to “make the job more appealing and more attractive, more rewarding, more growth, and you’ll be very surprised about how easy it is to staff.”
He is returning to the industry that he has been a part of for roughly 14 years with a plan to open up his own rooftop bar. He said he was hoping to be the owner that the industry really needs right now.
Have you left the food-service industry or are a business that is struggling to hire workers? Email this reporter at mhoff@insider.com.
A whole lot of people have been quitting their jobs in the past months, but it’s still lower than the number who would’ve quit in a pandemic-free world.
That’s because there’s still 3.7 million “missing quits,” according to Daniel Zhao, a senior economist at Glassdoor.
“Basically, I just looked at what quits were trending like in 2019 and looked at the shortfall during the pandemic, because, of course, quits had dropped pretty significantly during the pandemic,” Zhao told Insider.
In essence, he looked at that shortfall to see how much voluntary turnover didn’t happen during the pandemic. That drastic dip in quits is likely attributable to the pandemic casting uncertainty over people’s future career and financial prospects.
“The fact that we saw such a significant drop in quits indicates that there really was this period of time during the pandemic when many workers had to put their careers on pause while the pandemic went on,” Zhao said.
That’s not the case anymore: Quits have roared back, reaching record highs over the past three months. In June, 3.9 million people quit their jobs – a number within spitting distance of the record-breaking 4 million workers who quit in April. But even those haven’t completely closed the gap in quits. In June, Zhao found that “missing quits” were at around 5.1 million; now, they’re still at 3.7 million.
Some of today’s record-breaking quits may be due to “pent-up quits,” where workers waited until the labor market heated up and recovered to move on to “greener pastures,” as Zhao said. But that doesn’t mean that the quits rate is artificially high, according to Zhao – instead, it’s consistent with just how tight this once in a lifetime labor market is. It’s one where wages are up, workers can quit with ease, and job openings outnumber people looking for work.
And don’t expect those quits to drop anytime soon. The record highs have continued going in to the summer, and Zhao doesn’t see them cooling off just yet.
“What’s fundamentally driving these elevated quits is how tight the labor market is right now,” he said. “And there doesn’t seem to be any signs that the labor market is going to loosen in the coming months.”
The data from June’s Job Openings and Labor Turnover Survey also saw a record low number of workers being fired or laid off (just 1.3 million). It shows how desperate businesses were to hang on to workers – but they’re still quitting anyway. Or, in some cases, they’re simply poaching away workers from other businesses as employers scramble to hire.
“I think that the way that many people have been talking about labor shortages is the difficulty in hiring workers,” Zhao said. “But really what the quits data is showing – and other data as well – is showing that these labor shortages are two-sided for employers. It’s difficult to hire, but it’s also difficult to retain.”
But that’s not all. June marked another record low, with just 1.3 million workers being laid off or fired. In March 2020, that number was around 13 million, while from 2019 to 2020, it hovered between 1.7 million to 1.9 million a month.
DataTrek Research, an economic research group, tracks quits by something it calls the “take this job and shove it” indicator, which looks at quits as a percentage of job separations. That was a record 69.3% in June, meaning employers were more reluctant than ever to let workers go, and workers were more willing than ever to quit.
Jessica Rabe, DataTrek’s cofounder, told Insider by email that a high quits rate “typically reflects elevated worker confidence, which makes sense in the current environment given outsized labor shortages. People tend to leave their jobs when they find a better opportunity, and we think part of the high quits rate reflects the trend of many Americans relocating to the suburbs and out of urban areas throughout the pandemic.”
Rabe also said that Americans over the age of 55 are increasingly choosing to retire, which has been a primary driver of the so-called Great Resignation.
Another factor, per Rabe: Continued fears over the coronavirus and the possibility of new infections. While the Delta variant wasn’t quite raging at the time the June numbers were recorded, an analysis from payroll platform Gusto found that, in states opting out of unemployment benefits early, workers were more likely to come back in places with higher rates of vaccination.
Meanwhile, wages are going up across sectors as employers try to lure in new workers. That trend – alongside reports of businesses struggling to hire – have prompted some to say the country is in the midst of a labor shortage.
Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, previously told Insider that this isn’t a “damaging” labor shortage – hiring was still up in industries like leisure and hospitality as pay went up, showing that growing wages might be the key to getting workers back.
And if employers don’t pay up, they might just get told to take that job and “shove it.”
Former teacher Carrie Presley won “Teacher of the Year” two of the four years she worked for school districts in Oklahoma and Texas.
As an accountant-turned-math teacher, she told Insider she believed she finally found her calling, but during the pandemic she made a difficult decision: She quit teaching two weeks into the school year after learning she would be required to teach over 30 students in person. Presley was worried about how they were going to be able to follow CDC guidelines while crammed in a classroom.
“I was really kind of stuck between the health guidelines and the environment I was in, and with high-risk family members, I had to choose between my health and teaching,” Presley said.
Teachers like Presley have been quitting en masse for years, citing stress as the main reason, according to a survey by Rand Corporation. Low pay is also an incentive, since teachers make around 20% less than others with college degrees, per reporting from CNBC. And most recently, even more teachers quit during the pandemic because of health concerns. The National Education Association found that 32% of teachers surveyed said they thought about leaving the profession earlier than planned because of the pandemic. Enrollment in teacher-prep programs has also dropped. That’s why the number of teachers in the US hasn’t kept up with student enrollment; two-thirds of 1,200 school and district leaders surveyed by Frontline Education reported a teacher shortage.
Presley hadn’t planned on leaving her job until her health and the that of her loved ones was put at risk. She said the option to teach remotely “would have been a dream” and that it was frustrating to not have the choice.
Teachers want less stress and more respect
Abby Norman quit teaching after a total of 11 years as an educator, most recently at an online charter school. She said enrollment grew last school year during the pandemic.
“Every single year there were more things to do, there were higher expectations and if you had a problem, it was just treated like you were the problem not like there was a problem,” Norman said.
She now works as a bartender in Georgia, which she said is better for her mental health.
Although Norman said she’s making more and working fewer hours now than as a teacher in Georgia, the median annual salary for high school teachers in Georgia in May 2020 per BLS is $61,360 compared to $19,000 for bartenders in the state.
California-based Dustin Ancalade also made a career switch after a total of nine years of teaching, but he said the pandemic didn’t have to do with this change. He was already taking night classes for a year in software engineering. He stayed in education though, working at Stride as a software developer where he said he feels less stressed. He said his gross pay is slightly more now but monthly net pay is similar.
He said he thinks teachers have “marketable skills,” such as leadership and planning skills, that can be transferred to other jobs. Norman said her teaching skills are “highly valued” as a bartender, such as her communication skills.
Since quitting, Presley started a software engineering program and is vice president and head of video production at research firm FSInsight, but she hasn’t completely stepped away from teaching. She too is using the skills she developed in the classroom in a tech role to create educational materials on cryptocurrency and blockchain technology used by institutional and retail investors. She is making more money in tech than as she did as a teacher.
Some school districts are giving out signing bonuses, but Norman said what teachers really need is respect.
“The extra money is nice, but it’s really more about being respected as a professional,” Norman said. “I’m respected as a professional who is an expert at her job as a bartender. Teachers are not respected as professionals who are experts at their jobs.”
U.S. Federal Reserve Chair Janet Yellen (L) greets Howard University Economics Professor William Spriggs (R), who serves as chief economist to the AFL-CIO, as she arrives to deliver opening remarks at a summit on diversity in the economics profession at the Federal Reserve headquarters in Washington October 30, 2014.
REUTERS/Jonathan Ernst
Right now, a whole lot of jobs are open – and a whole bunch of workers are quitting.
But the labor market being weird is nothing new, according to economist William Spriggs.
The current shifts could be an ‘unwinding’ of more than a decade of declining wages and an aging workforce.
A lot of people remain unemployed, even though the number of job openings is high and businesses are desperate to hire. Americans that do have jobs are quitting at record-breaking rates. In other words, a major reshuffling is going on in the labor market.
As it turns out, a confusing labor market is nothing new, said Dr. William Spriggs, an economics professor at Howard University and chief economist at the AFL-CIO. Spriggs told Insider that low-paying jobs and older people remaining in the workforce were both surprising features of the last 20 years of the American economy. And what seems weird right now is actually just an “unwinding” of these two trends giving way to higher-paying jobs and younger workers.
The labor shortage is actually healing major dysfunctions in the 21st century economy, Spriggs explained.
Low-wage jobs rose and real wages declined
Since the early 2000s, the number of low-wage jobs grew, even as people became more educated. (Brookings’ defines “low-wage” as two-thirds of their area’s median wage, or less.)
A Brookings analysis from 2019 found that 53 million Americans work for low wages – which comes to 44% of workers ages 18 to 64. And it’s not just teenagers; more than half of those low-wage workers fall between the ages of 25 and 50.
“It was very hard to explain how, in the 21st century, we gained so many low-wage jobs,” Spriggs said.
Though pay growth picked up in the years preceding the pandemic thanks to states raising minimum wages above the federal level of $7.25 an hour, wages have declined over the past five decades.
Now some of those past patterns are “unwinding,” said Spriggs. He attributes some of that to more consistent hours in some sectors, like those benefitting from the rise of online shopping. Workers – especially women, who have had a rockier recovery – are flocking to industries like construction, transportation, and warehousing.
“With this transition going on, the workers who are employed are finding ways to get jobs in the sectors that are expanding and hiring,” Spriggs said.
Older workers stuck around longer than expected
The other “really strange thing” about the 21st century labor market was that the number of workers over age 50 has been on the upswing, and participation for people under 25 fell. Spriggs pointed out that there was much talk about the 21st century being the “age of the computer.”
“I think everybody thought that people over 50 will continue to retire and people under 25, this would be the best cohort ever if you were young, because you will have to backfill all those jobs,” he said.
Dr. William Spriggs.
Courtesy of Dr. William Spriggs
Instead, younger workers were unemployed at higher rates than older workers after the Great Recession, and were then hit harder by COVID job losses.
The pandemic might have evened out generational representation as a wave of older workers opted (or were pushed) into retirement over COVID fears, layoffs, and bleak industry outlooks. The Retirement Equity Lab found in an October report that, for the first time in 50 years, workers over 55 were unemployment at higher rates than the younger cohort.
After teen unemployment dropped significantly in May, it leveled out in June, coming in close to pre-pandemic levels. Insider’s Ayelet Sheffey and Madison Hoff reported that some expected teens would step in and fill the labor shortage, but June’s jobs report seemed to disprove that theory. Spriggs agrees that “there’s no evidence of that so far.”
The current labor market rollercoaster could create lasting change beyond temporary signing bonuses and other measures employers are using to lure in workers.
“Maybe because of the shift in demand, we finally shift to some of these other jobs that aren’t necessarily higher paying,” Spriggs said, but ones with more hours. That’s a potential advantage for workers: “The annual pay is much higher.”
In May 2021, workers were still quitting their jobs in droves – yet another strange facet of the slowly recovering economy.
According to recently released data from the Bureau of Labor Statistics, 3.6 million workers quit their jobs in May, a month when there was one available worker for every job open (and there were 9.2 million jobs open). In April, the quit number was a record-breaking 4 million.
DataTrek Research has its own tracker for how many of the job separations in a month were from quits – the “take this job and shove it” indicator. That indicator reached its second-highest rate recorded in May 2021, with 67.8% of job separations driven by quits.
This number was higher in the particularly quit-heavy leisure and hospitality industry, Axios first reported; it came in at 76.4%.
The number is still slightly lower than April’s record-breaking high of 68.8%. Jessica Rabe, DataTrek’s cofounder, told Insider that quits are still driven by reduced access to childcare and fears of infection. Also significant: Workers relocating to the suburbs from urban centers.
But quits – and the “take this job and shove it” indicator – may have peaked in April. Schools are set to reopen in the coming months and enhanced unemployment benefits ending could get more people back in the labor force.
“We think the bulk of people disenfranchised by their jobs have quit by now, given this difficult nature of the pandemic over the last year,” Rabe said. “We think the only caveat is if the Delta variant or others do take off and we get another raft of workers in customer service jobs quitting their jobs again, even with higher wages, but it won’t likely be as big as the first wave.”
Yes, wages are on the rise
That reading comes as leisure and hospitality workers say they’re not going to return to their previous positions. Insider’s Grace Dean reports that a third of hospitality workers said in a Joblist survey that they won’t ever return to the industry.
Those respondents want a new work experience, along with higher wages and better benefits. That’s not to say that leisure and hospitality isn’t growing: The sector made up 40% of jobs gains in June, according to the Bureau of Labor Statistics, and added 343,000 payrolls. Wages also grew for leisure and hospitality workers at a breakneck speed, soaring 7.1% in the past year.
Even so, the quits rate in leisure and hospitality was 5.3% in May. That could be due to those wage hikes raising low wages to just slightly less low. In June, the average hourly earning for nonsupervisory private employees was $25.68. It was nearly $10 lower for leisure and hospitality workers, coming in at $16.21.
Those conflicting numbers show a strange new pandemic trend: High unemployment, coupled with high job openings. Generally, unemployment is driven down as job openings go up – since people are presumably filling those roles. That doesn’t seem to be happening here.
“The large labor shortage and elevated quits rate also shows employers are not raising wages enough,” Rabe said, “which is constraining hiring.”
