Thursday, May 23, 2024

Is the Great Resignation over? Not quite. Turnover stays high in these industries.

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The Great Resignation has fizzled out.

But in some industries – like personal care services and trucking – workers are still quitting jobs in large numbers compared to before the pandemic, typically to take higher-paying positions.

The widespread job-switching in some fields is noteworthy because those struggling with high turnover generally are doling out bigger pay increases, both to hire the job-hoppers and to hold on to existing employees. Yet in other industries – like retail and professional services – quitting has dipped below pre-pandemic levels as wage hikes have moderated in a sign of a cooling job market and economic uncertainty.

“The Great Resignation has come and gone” but quitting “varies across industries,” says economist Justin Begley of Moody’s Analytics, an economic research firm.

Broadly, so-called quits rates have been “higher in in-person sectors where workers have been in short supply” since the pandemic, says Julia Pollak, chief economist of ZipRecruiter, a job search site.

Will the Federal Reserve lower interest rates soon?

A rapid rise in wages in sectors like personal care services and trucking is good news for those workers, helping them keep up with high inflation. But it’s a dilemma for the Federal Reserve, which hopes its aggressive interest rate hikes since early 2022 have curtailed sharp pay increases and thus tamed inflation. With price gains easing gradually, the Fed meets this week to discuss an updated roadmap for rate cuts this year.

What are the effects of the Great Resignation?

At the peak of the Great Resignation, in spring 2022, a record 4.5 million workers a month – or 3% of all U.S. employees – were leaving jobs. The pandemic spawned unprecedented labor shortages, forcing employers to beef up pay and benefits, and spurring workers to jump ship.

As the health crisis has faded, quitting and job switching have waned. In January, 3.4 million, or 2.1%, of U.S. workers bolted from their positions, slightly below the pre-pandemic mark, the Labor Department said in a report this month.

Why?

Besides a generally cooling job market, many people already switched to jobs that better match their skills, interests and salary requirements during the Great Resignation.

“They have no reason to put themselves back on the market,” Begley says.

Here’s a ranking of the 12 major U.S. industries, from those with more workers quitting than before the pandemic to those with less turnover, according to a Moody’s analysis of Labor Department data:

Other services

January 2024 quits rate: 2.7%

2019 average: 2.3%

Difference: +0.4%

The category includes a hodgepodge of services, including car repair, barbershops, dry cleaning, funeral homes and pet care. It still hasn’t recovered all the jobs lost in the pandemic even as consumer demand has returned now that the pandemic has eased.

As a result of abundant openings, more workers are switching jobs for higher pay. Wages rose 5.3% annually in February, up from 4.6% a year earlier.

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Transportation, warehousing and utilities

January 2024 quits rate: 2.4%

2019 average: 2.2%

Difference: +0.2%

This is another industry that’s creating fewer jobs as households have turned from buying goods to services. But while many warehouse positions have been replaced by robots, Begley says, truck driver shortages have intensified. A growing number of baby boomers are retiring and fewer young workers are entering the field, according to the American Journal of Transportation. The industry could use about 80,000 more truck drivers.

That’s prompting trucking companies to offer bigger raises and signing bonuses and enticing drivers to switch jobs at elevated rates.

Information

January 2024 quits rate: 1.7%

2019 average: 1.6%

Different: +0.1%

Many tech workers have been quitting but not because the industry is hot, Begley says. Rather, Amazon, Google, Microsoft and other tech giants have laid off tens of thousands of employees after adding too many staffers as e-commerce boomed during the pandemic.

Fearing more layoffs, many workers are hunting for tech jobs in other industries, Begley says.

“It’s about a fight or flight response,” he says. “A lot of workers are (looking) to flee to more stable” sectors.

Manufacturing

January 2024 quits rate: 1.7%

2019 average: 1.6%

Difference: +0.1%

The industry thrived during the pandemic as Americans who hunkered down at home bought more furniture, TVs and appliances. And like other in-person industries, factories struggled to find skilled workers, leading many employees to switch jobs for big raises.

But since the pandemic has eased, consumers have shifted their purchases to more services like dining out and traveling. Manufacturing activity has contracted for 16 straight months, according to the Institute for Supply Management.

Hires, openings and quits are all still above their pre-pandemic levels but are gradually getting back to normal, Begley says.

Leisure and hospitality

January 2024 quits rate: 4.6%

2019 average: 4.6%

Difference: 0

Leisure and hospitality, which includes restaurants and bars, has long been plagued by high turnover. Quitting spiked during the pandemic, reaching 5.5% of all workers each month in 2022, as millions of workers left the industry because of burnout or COVID-19 fears.

Now, Begley says, job switching largely has returned to its normal elevated level.

Also, workers have seen their average pay jump 29% since the pandemic, the most among industries, Pollak says, as restaurants and hotels moved to address dire labor shortages. State minimum wage increases also have played a role, she says. The higher pay is giving workers more incentive to stay with their current employers.

Health care and social assistance

January 2024 quits rate: 2%

2019 average: 2%

Difference: 0

Many health care workers burned out and quit during the pandemic. Quits have returned to normal but openings and hires remain elevated as baby boomers age and hospitals and doctors’ offices struggle to find skilled workers.

Many job vacancies may be in rural areas, discouraging workers in cities from leaving their current jobs to take the roles, Begley says.

Government

January 2024 quits rate: 0.8%

2019 average: 0.8%

Difference: 0

State and local governments struggled to attract workers during the Great Recession because they couldn’t match the private sector’s generous pay and benefits. More recently, they’ve been catching up and helping drive U.S. hiring.

But government workers tend to switch jobs far less frequently, partly because of attractive benefits, such as pensions, Begley says.

Financial activities

January 2024 quits rate: 1.3%

2019 average: 1.5%

Difference: -0.2%

Like construction, banks and other financial firms have been hobbled by high interest rates that discourage borrowing, Begley says. Hiring and the number of people switching jobs have decreased.

Professional and business services

January 2024 quits rate: 2.5%

2019 average: 3%

Difference: -0.5%

The sector includes a wide range of white-collar workers, including lawyers, architects, engineers and office managers. Growth in jobs and openings have slowed as high interest rates have dampened economic activity, Begley says.

Also, the shift to remote work since the pandemic has encouraged more professional workers to stay in their current positions if they’re allowed to work from home, Pollak of ZipRecruiter says.

Average hourly pay increased 3% yearly in January, down from 5.4% a year earlier.

Construction

January 2024 quits rate: 1.8%

2019 average: 2.3%

Difference: -0.5%

Construction has been hammered by high office vacancy rates amid the transition to more remote work. The industry is also grappling with rising material and labor costs and, most significantly, high interest rates.

As a result, hiring has fallen sharply from pre-pandemic levels and more employees are staying in place, Hourly pay was up 4.7% annually in February, down from 5.6% a year earlier.

Mining and logging

January 2024 quits rate: 1.6%

2019 average: 2.1%

Difference: -0.5%

Employment in oil and natural gas drilling is down sharply from before the pandemic, in part, because of volatile energy prices. Job openings peaked in 2022 along with record gasoline and crude oil prices but prices since have moderated.

Retail

January 2024 quits rate: 2.3%

2019 (pre-pandemic) average: 3.3%

Difference: -1%.

Retail was among industries that struggled the most to find workers during the health crisis as Americans avoided in-person jobs, spurring many employees to change positions for higher pay. The quits rate in retail averaged a robust 4% in 2022.

But since many employees already got big raises, they have less reason to search for new positions, Begley says. Large retail chains such as Walmart and Costco have hiked their base pay to $15 an hour or higher, helping them to retain more workers.

Retailers also have been shuttering stores for years as consumers shift their shopping online. That trend was accelerated by the pandemic and has reduced the number of job openings, providing fewer options for retail workers looking to make a switch.

Average hourly pay in the industry grew 1.7% annually in February, down from 5.1% a year earlier.

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