The Great Resignation: What Is It and Why Is IT Happening

Geoffrey Algar


Over the course of three months, starting from April until June, the American labor market experienced an all-time high in terms of resignations. And it hasn’t stopped: just last August, this rate has once again reached an all-time high, with over 4.3 million resignations – up by about 242,000 compared to figures last July 2021. The Great Resignation is in full swing, and you’ll need to understand it if you want to come out ahead.

Why is it Happening?

The short answer is Covid. Without the pandemic, the market might not have experienced such a wide shake-up to the extent that millions of people quit their jobs.

However, this is a surface-level answer. To know the deeper roots of the Great Resignation, it’s important to look at several factors that are causing it.

An abundance of Alternative Job Opportunities

Many forms of consumption were delayed during the pandemic, which naturally means that people are making up for the lost time in the post-pandemic months. This expenditure increase is fueling a whole lot of jobs across many different industries, creating a huge demand.

More than that, travel has been severely restricted by the pandemic.

This doesn’t just mean lost vacation opportunities. Actually, immigrants and work visas fill up a lot of seasonal and temp jobs – and now that immigration and international travel have drastically slowed, this huge demand remains unfilled.

When there are a lot of alternative opportunities, employees can afford to be more demanding and pick jobs that are more favorable to them.

This means, in turn, that employers must step up their game in trying to recruit in a scarce and competitive marketplace.

Increase in Pandemic-related Burnout

The scarcity in the labor market can also be attributed to burnout and harsh labor practices during the early stages of the pandemic.

As the pandemic started, many employers did not know how to react and were unsympathetic to the needs of their essential employees. This has led to many workers feeling disillusioned and refusing to return to the workforce, especially their previous employers.

Sudden Rise of Labor Activism

To explain the sudden rise of activism for better workplace conditions, one only has to look at the economic impacts of the pandemic.

Disrupted supply lines are leading to shortages worldwide, leading to a drastic price increase in basic goods. This pandemic-fuelled inflation has brought to attention a jarring reality: businesses’ wages aren’t keeping up.

Coupled with the previously-mentioned workplace shake-ups that might have led to harsher work conditions, employees are finding it easier to demand more from their employers – and when their own employers can’t deliver, they have plenty of other choices.

What the Great Resignation Means for Everyone

The Great Resignation is a huge worry for various industries – but it shouldn’t be.

So far, it seems like employers are holding out, refusing to make significant changes until the pre-pandemic markets reassert themselves. But if it doesn’t, these businesses will stand to lose more than what should have been necessary, as their finances slowly worsen over time.

This record-breaking economic phenomenon is a big deal for employers to be more discerning in choosing their next jobs.

The pandemic itself has allowed many people to be more sensitive to the things that matter to them, and this is fuelling the motivation to choose a meaningful job where they feel valued.

On the other hand, this is a chance for businesses to take a second look at their engagement terms. Many large companies are adjusting; Urban Institute and the Brookings Institution have voluntarily recognized their employee unions in an effort to reduce employee turnover.

Nevertheless, there’s still a long road ahead, and everything is still uncertain.

Will the pre-pandemic, employer-centered labor market reassert itself over time, or has balance been perpetually altered? The companies that answer the question correctly will come out ahead in the months to come.

Final Thoughts

The Great Resignation is shaking up the American labor market, and so far the end doesn’t seem to be in sight. How entities–both employer and employees–will respond will determine their fortune in the coming months.