Evidence for the “great resignation” is thin on the ground

AS THE EFFECTS of the Spanish flu waned in 1919, Seattle’s workers agitated. Many were fed up with long hours and poor pay, especially at a time of high inflation. Shipyard workers went on strike, leading others to down their tools in solidarity. Newspapers were filled with stories of machinists, firefighters and painters quitting their jobs. Events in Seattle sparked labour unrest across the rest of America and even much of the rich world. Bosses worried that the lower classes had become work-shy anti-capitalists.

Seattle once again seems like ground zero for a big shift in labour relations. In October the local carpenters’ union finished a weeks-long strike over pay and conditions. Hotels and shops remain understaffed. Local tech firms, worried about losing staff, have raised average salaries by nearly 5% since 2020. Microsoft, one of them, claimed earlier this year that 46% of the global workforce was planning to make “a major pivot or career transition”.

Seattle seems like an example of what Anthony Klotz of Texas A&M University has called the “great resignation”. That memorable term has quickly become a corporate buzzword, spouted on companies’ earnings calls and at cocktail receptions. It has also made waves online. An “anti-work” message board on Reddit, a social-media site, is filled with screeds against the demands of greedy bosses. The forum now generates more user comments a day than the “WallStreetBets” subreddit, which moved stockmarkets earlier this year.

The term is elastic, but in essence it makes the proposition that the pandemic has provoked a cultural shift in which workers reassess their priorities. People in low-status jobs will no longer put up with bad pay or poor conditions, while white-collar types scoff at the idea of working long hours. Some people have become lazier or feel more entitled; others want to try something new, or desire money less because they have come to appreciate the joys of a simpler life. This is, supposedly, leading to a tsunami of resignations and dropouts. There is just one catch: the theory has little hard evidence to support it.

The great-resignation thesis seems strongest in America and Britain. In October 4.2m Americans quit their jobs, equivalent to nearly 3% of total employment, close to the record (see chart 1). In the third quarter of the year nearly 400,000 Britons moved from one job to another after handing in their notice, the highest-ever level. Employers may be responding to the threat of further departures, too. A tracker compiled by Goldman Sachs, a bank, suggests that wage growth in both countries is unusually strong (see chart 2). A weak jobs report for America, released on December 3rd, seemed to confirm how hard it has become to hire staff even as vacancies remain sky-high. The world’s largest economy added just 210,000 jobs in November, below economists’ expectations of 550,000.

In other parts of the rich world, however, a great resignation is harder to spot. It is certainly true that millions have dropped out of work. Our best guess is that the labour force in the rich world is 3% smaller than it would have been without covid-19, a deficit of 20m people. Yet outside America and Britain there is little sign that this reflects more people quitting.

In November 107,000 Canadians who had left their jobs within the past year did so because they were “dissatisfied”, down from 132,000 on the eve of the pandemic. In Japan the number of unemployed people who had quit their previous job is near an all-time low. There are hints of a small rise in resignations in Italy, but across the EU as a whole the flow of people from work into leisure is lower than before the pandemic. Data from New Zealand on labour-market flows look entirely unremarkable. And in many places there is little sign that workers are getting antsy, which you might think could presage a rise in resignations. The number of industrial disputes in Australia continues to trend downwards. Collective disputes are “facing extinction”, according to a recent issue of Japan Labour Issues, a journal. If the pandemic has changed workers’ outlook on the world, they are hiding it pretty well.

Other factors, then, probably help explain the decline in the labour force. Many people still say they are fearful of catching covid-19 and may therefore be avoiding public spaces, for instance. Immigrants have returned to their home countries.

Even if a wave of resignations is largely an Anglo-American phenomenon, is there any evidence that the people who are quitting are doing so because they have become work-shy? Reddit posts aside, this does not seem to be the case. In Britain a tenth of workers say they would like a job with fewer hours and less pay—but that is in line with the long-run average. A recent study by Gallup, in America, suggests that “employee engagement”, a rough proxy for job satisfaction, is near its all-time high: hard to square with the notion that lots more people are desperate for a way out.

That suggests two more prosaic explanations for soaring quit rates. One relates to vacancies. When there are lots of open positions, people feel more confident about handing in their notice, even if they rather like their job. They may also be poached. Vacancies are high right now partly because the pandemic has led to surging demand in new sectors (say, warehouses for online retail). Analysis of America by Jason Furman of Harvard University and of Britain by Pawel Adrjan of Indeed, a job-search site, suggests that job quits are at the level you would expect them to be, given the number of vacancies.

Messrs Furman and Adrjan’s analysis may nonetheless underestimate how unremarkable the surge in quits truly is. In both countries resignations sank during the worst of the pandemic in mid-2020. Many people who would like to have left a position last year may only now have plucked up the courage to do so. Account for these “pent-up” resignations, and the recent pickup looks even less unusual.

Could a truly “great resignation” ever emerge? It would probably require more radical cultural changes. Households would need to decide, en masse, that their future consumption needs, and the income needed to fulfil them, were substantially lower. That would mean no more foreign holidays, less dining out and fewer household appliances. It would also mean fewer Christmas presents. Anyone who visited a Black Friday sale this year, in Seattle or elsewhere, would be quickly disabused of the notion that such a dramatic shift was on the cards. ■

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