The ‘Great Resignation’ Is Over. Can Workers’ Power Endure?

Tens of millions of Americans have changed jobs over the past two years, a tidal wave of quitting that reflected — and helped create — a rare moment of worker power as employees demanded higher pay, and as employers, short on staff, often gave it to them.

But the “great resignation,” as it came to be known, appears to be ending. The rate at which workers voluntarily quit their jobs has fallen sharply in recent months — though it edged up in May — and is only modestly above where it was before the pandemic disrupted the U.S. labor market. In some industries where turnover was highest, like hospitality and retail businesses, quitting has fallen back to prepandemic levels.

Now the question is whether the gains that workers made during the great resignation will outlive the moment — or whether employers will regain leverage, particularly if, as many forecasters expect, the economy slips into a recession sometime in the next year.

Already, the pendulum may be swinging back toward employers. Wage growth has slowed, especially in the low-paying service jobs where it surged as turnover peaked in late 2021 and early 2022. Employers, though still complaining of labor shortages, report that it has gotten easier to hire and retain workers. And those who do change jobs are no longer receiving the supersize raises that became the norm in recent years, according to data from the payroll processing firm ADP.

“You don’t see the signs saying $1,000 signing bonus anymore,” said Nela Richardson, ADP’s chief economist.

Ms. Richardson compared the labor market to a game of musical chairs: When the economy began to recover from pandemic shutdowns, workers were able to move between jobs freely. But with recession warnings in the air, they are becoming nervous about getting caught without a job when fewer are available.

“Everyone knows the music is about to stop,” Ms. Richardson said. “That is going to lead people to stay put a bit longer.”

Aubrey Moya joined the great resignation about a year and a half ago, when she decided she had had enough of the low wages and backbreaking work of waiting tables. Her husband, a welder, was making good money — he, too, had changed jobs in search of better pay — and they decided it was time for her to start the photography business she had long dreamed of. Ms. Moya, 38, became one of the millions of Americans to start a small business during the pandemic.

Today, though, Ms. Moya is questioning whether her dream is sustainable. Her husband is making less money, and living costs have risen. Her customers, stung by inflation, aren’t splurging on the boudoir photo sessions she specializes in. She is nervous about making payments on her Fort Worth studio.

“There was a moment of empowerment,” she said. “There was a moment of ‘We’re not going back, and we’re not going to take this anymore,’ but the truth is yes, we are, because how else are we going to pay the bills?”

But Ms. Moya isn’t going back to waiting tables just yet. And some economists think workers are likely to hold on to some of the gains they have made in recent years.

“There are good reasons to think that at least a chunk of the changes that we’ve seen in the low-wage labor market will prove lasting,” said Arindrajit Dube, a University of Massachusetts professor who has studied the pandemic economy.

The great resignation was often portrayed as a phenomenon of people quitting work altogether, but the data tells a different story. Most of them quit to take other, typically better-paying jobs — or, like Ms. Moya, to start businesses. And while turnover increased in virtually all industries, it was concentrated in low-wage services, where workers have generally had little leverage.

For those workers, the rapid reopening of the in-person economy in 2021 provided a rare opportunity: Restaurants, hotels and stores needed tens of thousands of employees when many people still shunned jobs requiring face-to-face interaction with the public. And even as concerns about the coronavirus faded, demand for workers continued to outstrip supply, partly because many people who had left the service industry weren’t eager to return.

The result was a surge in wages for workers at the bottom of the earnings ladder. Average hourly earnings for rank-and-file restaurant and hotel workers rose 28 percent from the end of 2020 to the end of 2022, far outpacing both inflation and overall wage growth.

In a recent paper, Mr. Dube and two co-authors found that the earnings gap between workers at the top of the income scale and those at the bottom, after widening for four decades, began to narrow: In just two years, the economy undid about a quarter of the increase in inequality since 1980. Much of that progress, they found, came from workers’ increased ability — and willingness — to change jobs.

Pay is no longer rising faster for low-wage workers than for other groups. But importantly in Mr. Dube’s view, low-wage workers have not lost ground over the past two years, making wage gains that more or less keep up with inflation and higher earners. That suggests that turnover could be declining not only because workers are becoming more cautious but also because employers have had to raise pay and improve conditions enough that their workers aren’t desperate to leave.

Danny Cron, a restaurant server in Los Angeles, has changed jobs twice since going back to work after pandemic restrictions lifted. He initially went to work at a dive bar, where his hours were “brutal” and the most lucrative shifts were reserved for servers who sold the most margaritas. He quit to work at a large chain restaurant, which offered better hours but little scheduling flexibility — a problem for Mr. Cron, an aspiring actor.

So last year, Mr. Cron, 28, quit again, for a job at Blue Ribbon, an upscale sushi restaurant, where he makes more money and which is more accommodating of his acting schedule. The strong postpandemic labor market, he said, gave him the confidence to keep changing jobs until he found one that worked for him.

“I knew there were a plethora of other jobs to be had, so I felt less attached to any one job out of necessity,” Mr. Cron wrote in an email.

But now that he has a job he likes, he said, he feels little urge to keep searching — partly because he senses that the job market has softened, but mostly because he is happy where he is.

“Looking for a new job is a lot of work, and training for a new job is a lot of work,” he said. “So when you find a good serving job, you’re not going to give that up.”

The labor market remains strong, with unemployment below 4 percent and job growth continuing, albeit more slowly than in 2021 or 2022. But even optimists like Mr. Dube concede that workers like Mr. Cron could lose leverage if companies start cutting jobs en masse.

“It’s very tenuous,” said Kathryn Anne Edwards, a labor economist and policy consultant who has studied the role of quitting in wage growth. A recession, she said, could wipe away gains made by hourly workers over the past few years.

Still, some workers say one thing has changed in a more lasting way: their behavior. After being lauded as “essential workers” early in the pandemic — and given bonuses, paid sick time and other perks — many people in hospitality, retail and similar jobs say they were disappointed to see companies roll back benefits as the emergency abated. The great resignation, they say, was partly a reaction to that experience: They were no longer willing to work for companies that didn’t value them.

Amanda Shealer, who manages a store near Hickory, N.C., said her boss had recently told her that she needed to find more ways to accommodate hourly workers because they would otherwise leave for jobs elsewhere. Her response: “So will I.”

“If I don’t feel like I’m being supported and I don’t feel like you’re taking my concerns seriously and you guys just continue to dump more and more to me, I can do the same thing,” Ms. Shealer, 40, said. “You don’t have the loyalty to a company anymore, because the companies don’t have the loyalty to you.”

Leave a Reply

Your email address will not be published. Required fields are marked *