The Great Resignation refers to the post-pandemic trend of millions of employees leaving their jobs. In short, it has been a massive and unprecedented disruption in our labor market. We saw two radical changes during the pandemic. First, many hourly workers were deemed essential and, thus, required to show up to work at significant personal risk. Second, many professional workers were required to work from home to limit the spread of infection. In response, all companies need to adopt a new style of management and operation. Let’s talk about how we can reimagine the future.
From these two changes came the two drivers of the Great Resignation. After assuming this risk to serve the public, the essential front-line workers now seek higher pay and better jobs. After seeing that work is feasible from home, the professional workers seek greater flexibility from their employers.
According to the Bureau of Labor Statistics, about 4.2M have quit their jobs each month for over a year. In May of 2022, four sectors represented 79% of total the 4.2M Quits; Trade, transportation, and utilities (923k), Professional and business services (754k), Leisure and hospitality (857k), and Accommodation and food services (765k).
Although the net employment market is improving, the Quit rate remains problematic. Employees seek better opportunities regarding wages, benefits, or other factors such as work schedule and location flexibility. We know replacing employees is especially expensive if they leave within a year because a company often does not recoup recruiting and training investments. But there are soft costs, too, as studies show that turnover lowers morale and productivity.
Why are people leaving their jobs?
The employees seeking higher pay or better working conditions leave the companies unable or unwilling to meet those demands. There is a desire for the flexibility and autonomy experienced during Covid-19, and employees got a taste of seeing what it is like to work remotely. Many loved this independence which is why 65% of employees want to stay remote, and about 33% want to keep remote or a hybrid model.
Recent news stories show that employees and their employers are forging a new accord. In some cases, the new agreement takes different forms, but this shift speaks to a need for management to take action.
A different experience for people of color
The Great Resignation has shown us, so far, how widely distributed “burnout” is and how narrowly distributed opportunity is for so many American workers. Black and Hispanic people in the workforce have different experiences than white people, so it is no surprise that the Great Resignation also looks different. For one, some sectors with the highest Quit rates, such as Retail and Transportation, are disproportionately Black and Hispanic. Now let’s look at compensation. On average, Black and Hispanic employees earn $840 and $799 per week, which is significantly lower than Asian or white employee earnings. The rates are even lower for Black and Hispanic women, meaning there are likely many opportunities for higher wages and thus a reason to quit their jobs.
Median usual weekly earnings of full-time wage and salary workers by race, Hispanic or Latino ethnicity, and sex (U.S. Bureau of Labor Statistics)
|Race and Hispanic or Latino ethnicity||Total||Men||Women|
|Total, 16 years and over||$1,037||$1,128||$939|
|Black or African American||840||870||811|
|Hispanic or Latino||799||866||732|
Black employees faced extreme stress during 2020, in particular. One source of stress was COVID-19. Black people had an 11 percent higher likelihood of dying, and 31 percent know someone who died of COVID-19. Another source of tremendous stress is the ongoing experience of police brutality against people of color and the associated trauma. Unexpectedly, working from home relieved Black employees from another source of stress – microaggressions in the workplace. All to say, there is a need for management to recognize this new reality.
How Diversity Works can help
We recommend a complete organizational assessment that evaluates 15 dimensions of diversity, equity, and inclusion (DEI) and deep dive into a specific group of “high-risk to quit” employees. A full assessment will help identify systemic causes of turnover, and the cohort analysis will identify drivers of turnover for the specific group. We always seek to understand your organization deeply, ensuring our analysis provides relevant and actionable recommendations.
Take this opportunity to reimagine work balance, pay equity, work design, and the philosophy of careers to meet the challenges of this new work social order.
Diversity Works thanks Kevin Kimble of the Financial Services Innovation Coalition for his contributions to this post.
About Denise Rosemond
Denise brings more than 20 years of experience in diversity, equity, and inclusion consulting. Her wisdom and judgment ensure clients use best-practice protocols to strengthen their businesses through DEI commitments.