The Great Resignation Is Over

The number of U.S. workers who quit their jobs fell to the lowest level in more than three years, according to the latest turnover data, signaling that workers are more cautious in a cooling labor market.

The Bureau of Labor Statistics reported that quits declined to 3.47 million in November 2023, the last month of recorded data. The quits rate, which measures people who voluntarily leave their jobs as a share of total employment, dropped to its lowest point since September 2020.

The No. 1 reason for this is fewer opportunities.

“Fewer workers are quitting their jobs because fewer employers are hiring,” said Julia Pollak, chief economist at ZipRecruiter. “Quits are a very reliable measure of how much opportunity there is in the labor market.” 

Job vacancies fell to 8.7 million in November from over 10.7 million a year earlier, and hiring declined to the lowest level since the pandemic-driven freefall in April 2020.

“The hiring rate has steadily declined from 4.6 percent in November 2021 to 3.5 percent in November 2023,” Pollak said. “That’s well below the average 2019 rate of 3.9 percent. In fact, it’s the lowest rate since 2014.” 

Available jobs still outnumber the 6.3 million Americans who are counted as unemployed and looking for work. But workers with jobs are evidently cautious. 

“They read the headlines about all the layoffs,” said Andrew Flowers, lead labor economist at Appcast. “Even though unemployment is low and job growth has been steady, workers believe there is a potential for recession. Especially white-collar workers. The media has been talking about it nonstop for the past year.”

LaborIQ Chief Economist Mallory Vachon said in recent months there’s been a persistent disconnect between the data showing a strong labor market and the experiences of workers and businesses. “The headline numbers tend to mask industry trends,” she said. “Throughout 2023, job gains have been concentrated in a handful of industries. Government, health care, and leisure and hospitality accounted for three out of every four jobs added in 2023. Hiring in other industries has been static.”

Cooling wage growth is another possible reason more employees are staying put. Employers say they are planning to offer smaller wage increases in 2024. Budgets for salary increases are set to rise by 3.8 percent this year, compared with a 4.1 percent increase in 2023, according to an employer survey by benefits advisory firm Mercer.

“I’m not sure I’m ready to call it the ‘Great Stay’ yet, but we’ve been seeing a stabilization in quit rates,” said Beth Carvin, the president and CEO of Nobscot Corporation, an employee turnover management software company in Kailua, Hawaii. “I’d be more inclined to call it the ‘Great Normalization’ as we have headed back to pre-COVID levels of voluntary turnover.”

Carvin noted that turnover rates in the years preceding the pandemic were already trending upward. “So, while we celebrate the ‘Great Normalization,’ there’s still some work to do,” she said. “Lowering employee turnover is one of the best ways for HR leaders to make a tangible contribution to the bottom line and increase productivity at the same time.”

The Great Resignation Fades

Demand for workers quickly heated up in the summer of 2020 as the economy emerged from the COVID-19 lockdowns earlier that year. Employers were desperate to fill positions, leading to increased wages and an improved array of benefits to attract new hires. Many people quit their jobs to jump to these better-paid positions, in a phenomenon dubbed the Great Resignation.

Much of the job growth in late 2020 and 2021 was driven by an explosion in e-commerce roles, Flowers explained, and quits rose partly because of a leveling up in the labor market by lower-wage workers.

“Restaurant workers transitioned into warehouse workers and drivers because the pay was better,” he said. “But those opportunities have since dried up.”

On the professional side, many white-collar workers quit their jobs for the prospect of remote-work opportunities, which have also been curtailed.  

Vachon noted that while quits have come down, they remain elevated by historic standards. “Looking at the 230 months before the pandemic from January 2001 through February 2020, only 12 months had quits above the most recent report,” she said. “But in the 35 months with data since January 2021, only three months have been below November’s total.”

Vachon said quits have remained elevated due to overall labor market strength but also because of the power employees have retained since the pandemic.

“There has been a shift in the balance of power between employers and employees that’s been driven by the talent shortage,” she said. “Demographic trends mean this balance of power is unlikely to revert to what we saw before the pandemic anytime soon.”

Looking Forward

Labor market experts predict that the quits rate will continue to steadily decline in 2024 from where it currently sits at 2.2 percent.

“I expect the quits rate to gradually come down, possibly reaching 2 percent by the end of the year,” Vachon said. “A 2 percent rate would essentially equal the average we’ve seen in the 23 years of reporting on labor turnover.”

Flowers said quitting will decrease, but not to the basement levels experienced during the Great Recession and its aftermath in 2008-2012. “The period of reshuffling brought on by the pandemic shocks to the system has eased, and we will see less turnover because of it,” he said.

Pollak added that we aren’t likely to see quits go back up again until the Federal Reserve cuts interest rates sufficiently and investment picks up, unleashing pent-up demand for workers.  

“That will increase job openings and hires, but also push quits back up,” she said, “and usher in a more dynamic labor market again.”