The Big Quit
In the United States, an unprecedented phenomenon is affecting the labour market, and it already has a nickname: “The Big Quit.” This is the new trend among employees who leave their position for a new one, or simply leave the job market altogether. For many Americans, Covid and its lockdowns have called lifestyles into question. An estimated 20 million people have quit their jobs since last spring.
No more than 2 million people a month were leaving jobs in 2010. Today, that number is closer to 4.5 million1. Not surprisingly, sectors with low wages and staggered shifts are feeling the worst losses: transport, food service, and hospitality are breaking records. Nearly 7% of bar and restaurant employees quit in September, the last known figure2.
The roaring recovery is leaving many vacancies, forcing employees to hike wages to attract new applicants. And the lowest-wage quartile has seen the biggest increases in the US.
While the Federal minimum wage is $7.25 an hour, and President Biden has promised to raise it to $15 in all sectors in 2025, corporations have taken the issue on: Target stores, Chipotle restaurants, and CVS pharmacies have already crossed the $15 line. Amazon is offering its new hires $18-$21, be it for the 150,000 seasonal workers hired for the holidays or for permanent employees.
The strength of the financial markets, catapulted by the economic recovery and a scope of monetary and fiscal support not seen before, has even allowed a larger number of employees to retire. In a recent study3, the St. Louis Fed considers that retirements have clearly accelerated since the pandemic. Whereas its models called for pensioners to make up about 18% of the American population in 2021, they accounted for 19.3% in August, well above the 15.5% that was the norm between 1995 and 2008. A gap of 2.4 million “unforeseen”pensioners.
Although this movement is spreading to China, it looks different in Europe, where there is a massive return to work, and many countries are returning to rare employment rates. In France, the 15-64 bracket exceeded 67% in the third quarter of 2021, the highest number ever recorded since 19754. This bodes well for unemployment in France.
However, the trend could change. A study reveals that 36% of Europeans are drawing income from e-commerce, content creation, and trading platforms. This is apt to spur the younger generation – Millennials first – to move away from salaried work and those Hard Day’s Nights the Beatles sang about. To create new forms of hybrid work? Time will tell.
Meanwhile, though these movements are far from stabilised and probably somewhat transitory, investors would be well-advised to take a closer look at two kinds of companies: those that can raise their prices to maintain their margins amid wage hikes, and those that have real power to draw and retain talent.
1. US Bureau of Labor Statistics, Quits levels and rates by industry
3. The COVID Retirement Boom, November 2021
4. INSEE, Study no. 295, 19.11.2021
5. What if… The “Great Resignation” doesn’t end?, Morgan Stanley 2021
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