Find out what labor economists have to say about why “the great resignation” became “the great stay”!
The U.S. job market has experienced a significant shift in recent years. What was once a period of record-high employee turnover has now transitioned into a phase of stability. This evolution, from the “great resignation” of 2021 and 2022 to what some labor economists call the “great stay”, marks a notable change. Today’s job market is characterized by low levels of hiring, quitting, and layoffs.
“The turbulence of the pandemic-era labor market is increasingly in the rearview mirror”, explained Julia Pollak, chief economist at ZipRecruiter.
When the U.S. economy began recovering from the Covid-induced downturn, businesses scrambled to fill positions. Job openings soared to record highs, unemployment reached levels not seen in decades, and wages climbed rapidly as companies were competing for workers.
In 2022 alone, over 50 million people quit their jobs – a record high – enticed by better opportunities in a flourishing job market. However, this period of intense activity has gradually cooled. The rate at which workers are quitting their jobs has now fallen below pre-pandemic levels, following its peak in 2022, according to Allison Shrivastava, an economist at job site Indeed.
Hiring activity has also slowed, reaching its lowest point since 2013, except for the pandemic’s early days. Despite this, layoffs remain historically low. This new trend of fewer layoffs and reduced job-switching indicates that employers are holding onto their current staff while workers are choosing to stay put, Shrivastava noted.
Why Did The “The Great Resignation” Become “The Great Stay”?
A major factor is what Pollak calls employer “scarring”. Businesses are hesitant to lay off employees after struggling to hire and retain talent during the past few years, she noted. At the same time, fewer job openings, which leads to a reduced confidence among employees when it comes to finding new jobs, have led to a decline in worker resignations.
The Federal Reserve’s interest rate hikes between early 2022 and mid-2023 is one of the culprits. As borrowing costs rose, businesses cut back on expansion and new ventures, which in turn slowed hiring.
For workers currently employed, the “great stay” offers unprecedented job security, according to Pollak. However, for job seekers – such as recent college graduates or those unhappy with their current roles – the environment is more challenging. Pollak advised these individuals to broaden their job search and consider learning new skills to enhance their prospects.