The Great Resignation Shows What Empowered Workers Really Look Like
March 11, 2022 | Tags: Free Markets, REASON
Some politicians insist that workers are so beleaguered governments should push them into labor unions and mandate a national $15 per hour minimum wage. But then economic and cultural conditions largely fueled by reactions to COVID-19 spurred an enormous shift in the relative clout of employees and their bosses. In a "Great Resignation" people are quitting jobs in huge numbers in search of better pay, improved conditions, and respectful treatment. Forget the myth of the oppressed worker; while that's true in some circumstances, we now have a reminder that power is relative to the conditions of the moment, and that people collecting paychecks can have as much leverage as those paying them.
In January, 4.3 million Americans quit their jobs, according to the monthly Job Openings and Labor Turnover Summary (JOLTS) from the Bureau of Labor Statistics. That's down a hair from the previous month, but well above levels considered normal before the pandemic and its associated dislocations disrupted people's lives.
"Quits fell to 4.3 million in January, coming off of record highs in Nov.," noted Daniel Zhao, senior economist for Glassdoor's Economic Research Team. "The Great Resignation is still in full swing even if quits are moderating somewhat. Quits are still up 23 percent above pre-pandemic levels."
Importantly, job openings remain at a near-record 11.3 million, up substantially from the 7 million openings in January 2020, just before COVID-19 rained on the world's parade. That means job seekers encounter a lot more demand for their services and can pick and choose accordingly.
"Demand for labor is historically high and workers are quitting their jobs at historic rates to take advantage of that demand," comments Nick Bunker, economic research director for North America at the Indeed Hiring Lab. "At the same time, employers continue to have a hard time filling open positions."
What taking advantage of that demand means varies from person to person, but there are definite commonalities. "Low pay, a lack of opportunities for advancement and feeling disrespected at work are the top reasons why Americans quit their jobs last year," Pew Research reported of survey results. "Those who quit and are now employed elsewhere are more likely than not to say their current job has better pay, more opportunities for advancement and more work-life balance and flexibility."
To put it bluntly, employers who grew accustomed to treating staff poorly when they had the upper hand are now reaping the results as those workers flock to jobs offering happier conditions and higher pay. People with desirable skills and good work histories are in great demand and able to negotiate much better terms of employment.
Of course, power can be abused by whoever has it. Barely a week passes without my teenage son's phone ringing with a request for him to take another shift at the supermarket where he works. The problem, more often than not, is that somebody just didn't show up, often never to be seen again. "'Ghosting,' or disappearing suddenly and without explanation, is becoming more common in the workplace," according to Blind, a business network which surveyed members. "One out of fifty professionals admitted to quitting a job without telling their manager or company's human resources."
But, more commonly (as Pew noted) workers use their leverage to improve their situations. What they demand includes higher pay, greater respect, and the ability to work from wherever they please.
"Employers are struggling to retain talent—and now are offering more money for workers as a strong incentive," according to Kelly Anne Smith of Forbes.
"Demand for remote work has been rising for years," observes professional services firm Deloitte. "But the global pandemic turned it from request to requirement almost overnight."
Healthy demand for labor has also created opportunities for people who were previously left out of the job market. After years of being priced out of work opportunities by high minimum wage laws, low-skilled and relatively inexperienced teens have been made employable again, as evidenced by my son's busy schedule.
"The unemployment rate for teenagers (ages 16 to 19) was 9.6 percent in July 2021, following rates of 9.9 percent in June and 9.6 percent in May," the Bureau of Labor Statistics reported last summer. "The last time the unemployment rate for teenagers was lower than 9.6 percent was in November 1953, when it was 8.6 percent."
Greater leverage for workers, as well as disenchantment with preexisting jobs, also inspired people to strike out on their own. "The pandemic has unleashed a historic burst in entrepreneurship and self-employment. Hundreds of thousands of Americans are striking out on their own as consultants, retailers and small-business owners," The Wall Street Journal observed in November. That may represent a long-term cultural shift, with a recent Junior Achievement USA survey finding that "3 in 5 American teens (60%) would be more interested in starting their own business than having a traditional job."
Everything is relative to existing conditions, of course. There's no telling what impact continuing inflation (now 7.9 percent) or Russia's invasion of Ukraine will have on the economy and, consequently, on workers' leverage. Nothing stays the same forever, and the market will again morph creating new opportunities and eliminating old ones.
But that sort of dynamism is an inevitable part of life, accelerated by personal, cultural, and governmental reactions to COVID-19, the chaos of the world, and whatever developments are to come. It's a necessary reminder of the foolishness of politicians' insistence on top-down policies that use law to impose costs and work arrangements that treat the economy and people's relationships as if they're fixed in amber. The Biden administration's insistence that every job be a union job threatens to eliminate flexibility that workers might favor. Teens regained access to the labor market only because demand for labor and rising pay rendered mandated minimum wages irrelevant; they really don't need to be priced out once again.
Workers won't always have the upper hand. But a free economy gives everybody the best chance to take advantage of situations as they arise and to seek arrangements that work for them. The Great Resignation is just an example of people using the leverage created by changing circumstances to make better lives for themselves.
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