THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

X

March 25, 2022

How 5 factors contributed (or didn't) to the Great Resignation, according to HBR

Daily Briefing
    Editor's note: This popular story from the Daily Briefing's archives was republished on Sep. 12, 2022.

    Writing for the Harvard Business Review, Joseph Fuller and William Kerr, both professors at Harvard Business School, explain the five factors that did—or did not—contribute to the current Great Resignation, even before the pandemic.

    6 Advisory Board resources for recruitment, retention, and the workforce landscape

    The Great Resignation is 'the continuation of a long-term trend'

    According to the U.S. Bureau of Labor Statistics (BLS), more than 47 million Americans quit their jobs in 2021—an unprecedented number of exits from the workforce that many people are now calling the Great Resignation.

    However, Fuller and Kerr write that "such talk is overblown." Although a record number of workers did quit in 2021, if the figure is considered in the context of total employment over the past dozen years, "you can see that what we are living through is not just short-term turbulence provoked by the pandemic but rather the continuation of a long-term trend," they write. 

    Based on BLS data, the average monthly quit rate increased by 0.10 percentage points each year between 2009 and 2019. Then, in 2020, the resignation rate slowed as the uncertainty of the Covid-19 pandemic led workers to hold onto their jobs in greater numbers.

    The pause on resignations "was short-lived," Fuller and Kerr write, and as record numbers of workers quit in 2021, including those who might have otherwise quit in 2020 had there not been a pandemic, a "so-called" Great Resignation emerged.

    Overall, the share of workers voluntarily leaving their jobs is now "back in line with the pre-pandemic trend," and "American employers are likely to be contending with [this growing trend] for years to come," the authors write.

    How 5 key factors influenced the Great Resignation

    According to Fuller and Kerr, five factors, which were exacerbated by the pandemic, helped shape our experience of the Great Resignation—and are playing a key role in determining future worker behavior.

    1. Retirement

    "Academic studies and online surveys alike have consistently found that the Great Resignation might be better thought of as the Great Retirement," the authors write.

    In 2021, older workers left their jobs at a faster rate than normal, and many did so at younger ages. Some of these workers retired due to a desire to spend more time with their loved ones or to focus on non-work priorities, which was made possible due to "surging stock markets and buoyant residential property values," Fuller and Kerr write. In addition, a significant number of older workers left because of their increased risk of severe Covid-19 outcomes.

    So far, there has been a 1.9% decline in workforce participation among workers ages 55 and older—the opposite of what occurred during the last major crisis, the Great Recession, when workforce participation in this age group increased by 1%.

    2. Relocation

    According to Fuller and Kerr, one factor that has not contributed to the Great Resignation is relocation, despite popular stories about "highly skilled workers abandoning the Bay Area in favor of scenic resorts." In fact, the rates of relocation have been on the decline since the 1980s—and the overall movement rate in 2021 was the lowest one on record in more than 70 years.

    In addition, those who did move in 2021 mostly moved locally. Moving within a county is the most frequent form of relocation, while moving to a different state is the least frequent.

    3. Reconsideration

    Burnout fueled by the stressors of the pandemic has caused many people, particularly frontline workers, parents and caregivers, and organizational leaders, to "reconsider the role of work in their lives," Fuller and Kerr write.

    Women and younger workers have also been more affected by burnout than men and older workers. According to a 2021 Women in the Workplace report, one-in-three women are thinking about leaving the workforce, switching jobs, or reducing their work hours. Notably, Fuller and Kerr write that "[t]his is often a forced choice" since "many women have no option other than leaving to meet caregiving obligations" brought about by the pandemic.

    In addition, junior personnel in white-collar industries have experienced significant levels of burnout. These workers have often had to work long hours "without benefiting from the training, mentorship, and client interactions that previously made such jobs rewarding," the authors write, which in turn may have lowered their tolerance for such demands.

    4. Reshuffling

    Of the many workers who are quitting their jobs, some are "reshuffling"—or moving to different jobs in the same or between sectors—instead of completely leaving the labor market, Fuller and Kerr write. According to an analysis of BLS data by the Economic Policy Institute, hiring rates are outpacing quit rates in many sectors—a trend that suggests high wage growth may be attracting new applicants to open jobs.

    Among the industries with the highest quit rates, such as accommodation and food services and leisure and hospitality, many companies are taking to improve their wages and offer new benefits to attract new workers and improve retention. For example, McDonalds last year increased the hourly wages for current workers by an average of 10% and raised entry-level wages from $11 to $17 an hour. The company also added emergency childcare, paid time off, and tuition reimbursement to its benefits package.

    5. Reluctance

    "Fear of contracting Covid in the workplace has made many workers reluctant to return to the office," Fuller and Kerr write. According to a Pew Research Center survey of 5,858 working adults, 64% said they were uncomfortable returning to the office, and 57% reported choosing to work from home because of Covid-19 concerns.

    In addition, other research has found that many workers are prepared to quit if their employers do not offer hybrid-work options. A survey of over 10,000 workers found that 36% said they would search for a new job if not given a remote or hybrid option and 6% said they would be willing to quit outright, even without a new job lined up.

    "The Great Resignation was no anomaly," Fuller and Kerr conclude. "[T]he forces underlying it are here to stay." (Fuller/Kerr, Harvard Business Review, 3/23)

     

    6 Advisory Board resources for recruitment, retention, and the workforce landscape

    Workers are feeling overwhelmed by the demands of Covid-19 and are increasingly concerned about pay and staffing shortages. With resignations and even labor strikes on the rise, what can you do to recruit, support, and retain your workforce? We've uncovered the most important insights and turned them into actionable items for you. Whether you are trying to recruit a nursing workforce amid a shortage or simply trying to keep your existing staff, we have curated multiple pieces of expert guidance.

    staffingRetention:

    Recruitment:

    Workforce landscape:

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.