Why Workers Are Quitting
Dear Rich Lifer,
We all remember the initial days of the pandemic. Businesses were closing left and right, workers were suddenly unemployed or furloughed idefinitely…
Anyone with a job was clinging to it with all their might.
But now, a year later, the labor market couldn’t look more different. According to the Labor Department, in April, 2.7% of workers were leaving their jobs — the highest level since 2000!
The power shift is forcing employers to raise wages and offer other promotions and incentives to secure employees.
And although unemployment rates are still elevated, this trend seems to signal that employees are confident about risking their job security for better opportunities.
Today, we look at what it means for the labor market as a whole, and give you some tips if you’re also planning to quit your job in the near future.
What’s Fueling This Trend?
Resignations are on the minds of many workers. In fact, in a March survey of 2,000 workers by Prudential Financial Inc., 26% said they plan to look for a new job when the threat of the pandemic decreases.
There are multiple factors fueling this exodus of workers. One reason is that workers have gotten used to the flexibility of remote work and are reluctant to return to a full-time, traditional office setting, especially while the virus is still a threat.
Others are experiencing burnout from extra pandemic workloads. Many employees found themselves the sole members of what used to be multi-person teams after Covid forced companies to let workers go.
Many workers are also looking for higher-paid jobs, as spouses and partners either lost jobs or are now staying home to provide care for children or the elderly members of their families. A wage gap now exists that needs to be made up.
Many of those quitting also fall into a specific category: new employees, many of whom started remotely and have never met their co-workers.
Take, for example, Ally Financial Inc., a Detroit-based company that hired 2,000 people during the pandemic. Kathie Patterson, the lender’s chief human resources officer, notes that turnover is highest in this group of workers who “have never stepped foot within our organization.”
Companies are having to get creative to keep employees and build relationships. Ally Financial offers 100 shares of stock to every employee, in an attempt to foster a sense of loyalty among workers.
What Does This Mean for the Labor Market?
Labor economists believe that employee churn, which is defined as the number of employees leaving a given business over a certain period and being replaced by other workers, actually signals a healthy labor market.
High quit rates, in fact, tend to correlate with people assuming new positions that are better suited for their skill-set, personal lives, or interests.
Employee churn puts workers in roles where they are more productive, which in turn, results in increased productivity and economic growth.
In the wake of the 2008 financial crisis, economists Edward Lazear and James Spletzer determined that reduced churn created a significant drag on gross domestic product.
At the time of their study in 2012, they found that when churn is low or reduced, there can be a high cost for the economy because workers are not moving into higher-value positions. They estimated that the cost of reduced churn was $208 billion, which, on an annual basis, amounts to about .4% of GDP for a period of 3.5 years.
Are You Thinking About Resigning?
If you are part of the 26% of people who are considering resigning soon, we hope you can benefit from these tips for leaving your company on the best terms possible.
Be Upfront: It is natural to be eager to leave a job that is no longer serving you. However, Christy Noel, a career coach and co-author of Your Personal Career Coach, stresses the importance of keeping your resignation professional by scheduling a face-to-face meeting with your boss before putting anything in writing. You should also refrain from telling coworkers about your plans to quit before making it official with your manager.
Give Two Weeks: This traditional time frame goes hand-in-hand with being upfront. You want to give your workplace at least two weeks’ notice, and you should plan to offer more time if you are in a higher executive role. You can also offer to help put together a transition plan to leave on a good note.
Keep it Simple: There’s no need to go into details in your formal resignation letter, which basically serves as proof for HR that you are leaving the company. Most resignation letters should only be a few sentences and should be addressed only to your direct supervisor. Refrain from airing grievances or going into detail about your next job.
If you are able to, write an upbeat resignation letter and consider taking the time to make a brief, positive reflection about your time at the company. If you don’t feel able to do so, Cara Heilmann, chief executive of the career coaching firm Ready Reset Go, advises keeping things factual and straightforward is the best way to handle writing the letter.
Give Yourself Time: If you are able to take time off between jobs, it’s always best to do so. Even if you can’t take time off, it’s important to reflect and let go of any baggage you may have had from your previous job. If you want to start off at your new position on the right foot, you don’t need negative feelings from a previous job affecting your future performance.
Ms. Heilmann states, “If I could give any words of wisdom, especially to those who are early-career, it’s to figure out a way to manage that transition so you start completely baggage-free.”
We hope all our readers find themselves in productive and fulfilling jobs this year!
To a Richer Life,
The Rich Life Roadmap Team