- Record resignations suggest Americans are confident in their ability to find better jobs.
- The unusual labor market trend could give way to several encouraging developments for the US economy.
- Here are four reasons the wave of quits could benefit the United States, from a pay rise to a productivity revolution.
- See more stories on the Insider business page.
At first glance, the job market doesn’t make much sense.
Take the example of April: ten million Americans were unemployed, although almost the same number of jobs were open (9.3 million, a record). In the same month, hiring slowed and 4 million more people left their jobs (another record). This sum could increase even more; about 40% of employees have considered quitting, according to a Microsoft survey.
For the first time in decades, workers are missing, not jobs. And companies’ efforts to attract hires could bring long-awaited improvements for the average worker.
Here are the four reasons why a wave of quits can pay dividends for American workers in the future.
1. More power for workers
While the record number of dropouts may seem like a
Bank of New York survey of consumer expectations save this story. Americans’ job search expectations jumped in May to their highest level since February 2020, just before the start of COVID-19 lockdowns. Expectations for wage growth have also increased.
Taken together, the data and the spike in quits suggest workers are tapping into new power in the economy. With such a high demand for labor, companies are offering perks like signing bonuses and better perks to speed up their hiring efforts.
2. Higher wages
The clearest sign of increasing worker power is nationwide wage growth. Wages have skyrocketed in the past two months at the fastest pace since the 1980s, as companies competing for workers increase starting wages. Large-scale employers, including Amazon, McDonald’s, Chipotle and Under Armor, have all announced pay increases in recent weeks.
An increase in wages can quickly benefit the entire economy, especially when wages rise among low-income Americans, who are most likely to spend new money instead of parking it in a bank. Studies of how the stimulus checks were spent support this claim.
3. A productivity revolution
The wave of resignations has also opened the door to higher productivity growth. Many businesses that have endured throughout the pandemic have been forced to cut operations to the bare essentials. Servers have been replaced with QR codes, hotel check-ins have been done through online apps, and real estate tours have gone virtual.
The country has since withdrawn many of its COVID-19 restrictions. Yet a surge in worker productivity suggests that some of the changes from the pandemic era remain. Businesses pay their employees more, and workers take advantage of new technology to do more. Productivity climbed 5.4% in the first trimester, the fastest rate in over 20 years.
Companies that do more with fewer workers and increased productivity can trigger what economic writer Noah Smith sees as a “virtuous cycle” for the economy at large. Technological advancements and new innovations can further increase productivity, giving workers a better case for demanding higher wages, Smith wrote in a June 13 statement. blog post.
4. Smarter job creation
Americans have long feared that automation could wipe out jobs from the U.S. economy for good. But previous periods of radical innovation prove otherwise, Smith wrote. The Industrial Revolution drove countless Britons to quit dilapidated trades and move on to better paying jobs. The internet has boosted productivity in virtually every pocket of the economy, but it has also paved the way for entirely new industries.
The national push for higher wages and higher productivity should be seen as an encouraging development, not a disaster, Smith wrote.
“To believe in technological progress is to believe in the potential of humanity,” he said. “Do we really think ordering QR codes in restaurants will be the innovation that ultimately makes humans obsolete? “