The Great Resignation – Encouraging June Jobs Report Hides This Worrying Trend
After a couple of less-than-stellar jobs reports, June’s numbers came in with a seemingly more positive outlook. The Bureau of Labor Statistics reported last week that 850,000 jobs were added by the U.S. economy last month. While the figure seems promising at first, a deeper look into the numbers uncovers an uncomfortable reality — people are quitting their jobs at an alarming rate.
The addition of jobs in June accounts for the largest monthly gain since last August, and wages rose for the third month in a row. Increased wages are a sign that the New York Times says employers are trying to attract applicants with higher pay and workers are gaining bargaining power.
The numbers could also be indicative of long-awaited economic relief. Increased vaccination rates, growing interest in travel, recently opened restaurants and entertainment venues all contributed to the biggest chunk of June’s job gains with 343,000 jobs added to the leisure and hospitality sector.
While these numbers are reassuring, other sections of the report highlight different trends. The unemployment rate rose slightly to 5.9% and the share of the working-age population active in the labor force was unchanged at 61.6%, demonstrating that the millions who dropped out of the workforce have yet to return.
Another worrying trend is the number of people leaving their jobs. According to the BLS, the number of people who quit or voluntarily left their previous job and began looking for new employment increased by a whopping 164,000 in June bringing the total to 942,000. This means that the amount of people out of work in June has outpaced the number of new jobs added, contributing to the overall unemployment number.
A similar pattern was observed in April, where 9.3 million jobs were added, but 4 million people quit their positions at the same time.
This rate of resignation is the greatest on record since the BLS began accumulating this data. While there are positive outlooks towards the economy overall, with strong consumer confidence and industry-wide rebounds, the employee malaise contributing to tight labor markets is something unique to 2021.
The unwillingness of employees to fill open positions has largely been making the news for the last couple of months. Overall, there are more jobs than there are people to fill them, and for one of the first times in history, a relatively high rate of unemployment. Several factors have contributed to workers’ hesitancy to return to work. The ongoing pandemic, vaccination rates, and access to childcare have largely kept workers home. Some have also argued that the availability of unemployment benefits has incentivized them to stay home.
President of staffing company ManpowerGroup North America Becky Frankiewicz told The New York Times that “today there are more job openings than before the pandemic and fewer people in the labor force” adding that the defining challenge for employers is enticing American workers back to the workforce.
It is certainly a bargaining arena in favor of the worker, as workers have the luxury of requesting higher wages before they decide to return to the workforce. This environment has also made it easy for workers to leave their jobs in favor of something better, something that could turn the tide of employment figures as the recovery tapers off.
As the hospitality and leisure sector begins to fill open vacancies, more attention will be paid to the number of workers leaving those, and other, positions. There are still 6.3 million fewer jobs now than at the start of the pandemic, and with a tight labor market, there is little room for workers to leave their jobs en masse in anticipation of something better.
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