Are you resigned to the Great Resignation?

Don’t be. Whether you’re buying or selling labor, the so-called Great Resignation exemplifies the innumeracy of much of the journalistic profession, along with the statistical credulity of their audience.

The problem isn’t with the alarming-looking numbers themselves. Lots of people really have left their jobs – more than 47 million in 2021. The problem is with how we interpret this number.

The incorrect interpretation is that people are giving up on the idea of working for a living. That’s not what’s happening.

What the Great Resignation numbers are telling us is that employees have decided they can choose to leave jobs they hate. They aren’t leaving the workforce to mooch off their parents. They’re leaving the jobs they have for hoped-for greener pastures.

The proper metric for understanding workforce shrinkage is something else. It’s called the labor force participation rate (LFPR). It measures the percentage of the potential workforce that either is employed or isn’t but would like to be.

For an in-depth analysis of a complex subject, read Brooking’sLabor market exits and entrances are elevated: Who is coming back?”, Lauren Bauer and Wendy Edelberg, December 14, 2021.

Very briefly, LFPR increased steadily from its post-great-recession low of just over 80% to a pre-pandemic high of 83% (for those aged 25 to 54 years old; different age thresholds yield different but parallel outcomes). It “crashed,“ to use an unnecessarily dramatic verb, to a pandemic-driven low of just under 80% in 2020. It’s been recovering since then, to a current level of about 82%.

The usually cited evidence doesn’t, that is, support the proposition that we Americans have given up on the idea of working for a living.

What’s real in all this is an imbalance between the number of jobs employers have open and the number of qualified applicants who want those open jobs. To a significant extent this is a consequence of how strong the economy is, not how few workers are available. To give you an idea, 64 million jobs were created in 2021, while first-time unemployment claims fell to about 200,000 from about 800,000 a year earlier.

Another view: In 2021 the economy added about 64 million jobs while “only” about 47 million employees resigned from the jobs they had to express interest in them.

One way or another, employers want to hire more people than they can find who want to be hired. What’s an employer to do? A few thoughts come to mind:

  • Don’t gripe about the law of supply and demand. You might as well resent gravity for making the direction you go when you trip and fall down. Right now, demand exceeds supply, which means prices – compensation, that is – ought to increase. In other years, when the supply of suitable workers exceeded demand, employers were happy to pay them less.
  • Keep the phrase “that’s why they call it work” to yourself. No manager can make every responsibility in every position fun. That isn’t an excuse to make a job unpleasant. If you’re in doubt on this point, buy yourself a copy of Leading IT: <Still> the Toughest Job in the World and read chapter 6, which talks about how to motivate employees, also chapter 7, which covers team dynamics.
  • Stop discriminating. I’m not talking about race, gender, ethnicity, or age, although if you do discriminate on any of these bases, shame on you, and stop it. Add to your do-not-discriminate-against list bad resume writers. You aren’t after all, hiring a resume.
  • Make onboarding more effective. The hidden cost of bringing new employees up to speed has always been large. The less time employees spend with you before leaving for greener pastures, the less time you have to amortize the cost of onboarding and acculturation. As employment time shrinks, the impact of onboarding and acculturation increases.

Bob’s last word: Once upon a time, much of the workforce was unionized, which gave them, and also independent employees some level of protection from bad managers. Think of the Great Resignation as a sort of crowdsourced virtual unionization.

Couple it with the increased willingness of employees to insist on better working conditions, the impact of the so-called “gig economy,” and the rise of the remote worker, and it’s clear that building desirability into the work environment can’t be an afterthought anymore.

Bob’s sales pitch: A favor, please. If you’ve read any of my books, it would be helpful if you’d post a review on Amazon. That’s especially true if you liked what you read (authors have egos, after all). But even if you’re less than enthusiastic, the number of reviews adds a patina of legitimacy to book shoppers deciding which book to buy on a given subject.