By Michael Jeanfreau, Regional Economist

What is the Great Resignation?

Through almost half of 2021 (1), a record number of Americans quit their jobs. This mass movement of workers has been called “The Great Resignation.” Anthony Klotz, an associate professor of management at Texas A&M University, originally used the term in an article when he predicted the exits back in May 2021 (2). After more than a year of uncertainty, rapid changes in the work environment and adjustments to new social norms caused Klotz to speculate that there were “pent-up resignations that didn’t happen over the past year,” and that there would be a reckoning later in the year.

Data from the Job Opportunity and Labor Turnover Survey (JOLTS) (3) administered by the U. S. Bureau of Labor Statistics (BLS) validated Klotz, showing that quits spiked in April 2021 to just over 4 million, a record in the JOLTS survey’s history. Every month since, apart from one, over 4 million quits have occurred across the nation, slowly climbing to 4.5 million by March 2022.

During this time, as the U.S. is struggling to recover to pre-pandemic employment numbers, elevated quits are viewed by many as a concern. Historically, however, economists have actually viewed elevated quits as a healthy economic sign. It indicates employees are confident in their ability to secure new employment and can use this confidence to leverage better positions or better pay (4, 5). 

While the nation struggles to recover post-pandemic jobs, Utah has experienced post-pandemic growth that saw large recovery gains through 2020 and a tightening labor market through 2021. As of April 2022, Utah’s 1.9% unemployment rate is almost half of the nation’s 3.6% rate (6). While the US struggled to recover to pre-pandemic employment levels, Utah made that recovery quickly. It was achieved in October 2020, and the state’s job count hasn’t stopped growing since (7). How do these differences play out in the JOLTS data for the state in comparison to the nation?

Utah’s Soaring Job Opportunities Market

In March and April 2020, layoffs and discharges skyrocketed in the wake of COVID-19 and pandemic restrictions. Quits dropped in response to the uncertainty, dropping in April and May 2020. Workers are unlikely to leave a secure position in the wake of so many layoffs. Hires rose to over 100,000 in May, one of the early signs of Utah’s resilience in comparison to the nation. Note that hires rose above the number of jobs open since many of these hires were merely workers returning to work. Employee confidence rose with the increase in hires and quits began to return to pre-pandemic norms. Before the end of the year, job openings rose above hires as growth returned in October. The calendar year 2020 ended with openings, hires, quits, and layoffs all returning to pre-pandemic numbers.

When 2021 rolled around, Utah was in a healthy position, with the economy already recovering and growing. Openings, hires, and quits all began to slowly climb in the spring. Companies were opening positions and hiring a bit faster, the labor force participation rate was rising, and COVID restrictions were beginning to wane, but all these saw a sudden shift in April with a collective change in attitude when openings and hires both jumped. In April 2021, the nation made a collective judgment that the pandemic was over, as seen in the changed behavior.

Utah JOLTS Data in Thousands, Seasonally Adjusted

   July 2019-Feb 2022

The metric that stands out is our incredibly high openings. Employers have been careful through 2020, facing an ambiguous future. By 2021, confidence to invest had returned. Openings skyrocketed. Meanwhile, the flow of employees has stayed within the bounds of what has been seen in prior years. This makes sense: openings have an unlimited ceiling, while the other metrics are bounded by how many real people can make those transitions (8).

[Reference domestic migration blog post by Ben Crabb, Regional Economist]

Opportunities Abound

Now in 2022, it’s a mixed bag. Employers face another year of struggling to find labor, evidenced by our low unemployment rate. Rising housing prices may yet become a restriction upon the state’s ability to pull in additional labor from outside the state, a struggle large enough that federal legislation has been proposed to combat high housing prices (9). Inflation sees the cost of doing business rise on top of competing for labor through wages (10).

It’s not all bad news. On the other side of the coin are employees. The high number of job openings allows workers to be selective about where they work, how they work, and how much they get paid. Some of the lowest paid workers are benefiting the most: laborers in blue-collar and manual-service work can easily switch between industries, like food service and local delivery, because of low training requirements. This inter-industry mobility allows lower-skilled workers to take advantage of wage gains across a spectrum of work. While this means businesses in several industries have to compete with each other for labor, it also has the benefit of bringing up the wage floor.

 As a business, it’s obviously better to have a high demand for services and struggle to find employees than to have no demand for services and many employees to pay. Additionally, despite the housing shortage, Utah’s job market continues to pull people to the state (11). Job growth remains positive (12). The worst case scenario would be quits on the rise while hires drop, which would indicate people simply leaving the labor force entirely, or the economy starting to weaken. What’s been seen instead is a return to almost a pre-pandemic market in terms of turnover, but far more job openings than normal. It’s a time of great opportunity and leverage for employees and reflects employer confidence in their long-term prospects as they invest in new businesses (and thus jobs) within Utah.