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Economist sheds light on 'Great Resignation' in America

Christian Fernsby |
During the earliest months of the pandemic, employers couldn’t downsize fast enough.

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Millions were laid off, executives took symbolic pay cuts and ordered wage and hiring freezes, and many economists predicted a grim year ahead for workers hoping to just get their old jobs back, never mind get ahead.

Eighteen months later, U.S. employers are struggling to fill 10 million jobs and many of those same workers are looking at the offerings and saying, “No, thanks.” Since April of this year, Americans have quit their jobs and not returned to the workforce at a historic rate, an exodus some call “The Great Resignation.”

According to the latest U.S. Bureau of Labor report, 4.3 million quit their jobs in August, 242,000 more than in July. The monthly quit rate hit a new high, at 2.9 percent. Though quitting is happening across all job sectors and among workers at all skill levels, it was up in August in hospitality and food services, wholesale trade, and in state and local education.

Lawrence Katz, the Elisabeth Allison Professor of Economics at Harvard, is a labor economist who analyzes earnings inequality and the effect that education has on living standards.

"A large number of workers lost their jobs in the pandemic and some are hesitant to come back to the labor market," explains Katz.

"We also have disruptions to the supply of temporary and seasonal workers through increased restrictions on immigration and work visas.

"And when there are a lot of outside opportunities, people are much more willing to take a chance on leaving their current job.

"The quitters are not really leaving the workforce.

"What happened is a lot of people lost their jobs early in the pandemic and a lot of them have not come back, especially when they haven’t had the opportunity to come back to their previous jobs.

"I think a lot of employers are surprised at how many workers have balked at coming back to the office, the restaurant, or other workplaces.

"What I don’t know is whether employers can hold out and try to restore the prepandemic bargain more favorable to employers than to workers.