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Organizational
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The Great Resignation

Didn’t Start with the
Pandemic
by Joseph Fuller and William Kerr

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 HBR / Digital Article / The Great Resignation Didn’t Start with the Pandemic

The Great Resignation Didn’t

Start with the Pandemic
by Joseph Fuller and William Kerr
Published on HBR.org / March 23, 2022 / Reprint H06X1O

Maria Luisa Corapi/Getty Images

The numbers are sobering.

In 2021, according to the U.S. Bureau of Labor Statistics, over 47

million Americans voluntarily quit their jobs — an unprecedented mass
exit from the workforce, spurred on by Covid-19, that is now widely
being called the Great Resignation. Worker shortages are apparent
everywhere: Gas stations and dentists offices alike have reduced their
hours of operation because they can’t find new employees to replace

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 HBR / Digital Article / The Great Resignation Didn’t Start with the Pandemic

those who have quit. The Great Resignation, we’re told, has upended the
relationship between workers and the labor market.

But such talk is overblown. A record number of workers did quit their
jobs in 2021, it’s true. However, if you consider that number in the
context of total employment during the past dozen years, as illustrated
in Figure 1, you can see that what we are living through is not just short-
term turbulence provoked by the pandemic but rather the continuation
of a long-term trend.

See more HBR charts in Data & Visuals on HBR.org.

The figure — and the numbers — tell a clear story. From 2009 to
2019, the average monthly quit rate increased by 0.10 percentage points
each year. Then, in 2020, because of the uncertainty brought on by

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 HBR / Digital Article / The Great Resignation Didn’t Start with the Pandemic

the Covid-19 pandemic, the resignation rate slowed as workers held on

to their jobs in greater numbers. That pause was short-lived. In 2021,
as stimulus checks were sent out and some of the uncertainty abated,
a record number of workers quit their jobs, creating the so-called
Great Resignation. But that number included many workers who might
otherwise have quit in 2020 had there been no pandemic. We’re now
back in line with the pre-pandemic trend, which is one that American
employers are likely to be contending with for years to come.

In our view, five factors, exacerbated by the pandemic, have combined

to yield the changes that we’re living through in today’s labor market.
We call these factors the Five Rs: retirement, relocation, reconsideration,
reshuffling, and reluctance. Workers are retiring in greater numbers
but aren’t relocating in large numbers; they’re reconsidering their
work-life balance and care roles; they’re making localized switches
among industries, or reshuffling, rather than exiting the labor market
entirely; and, because of pandemic-related fears, they’re demonstrating
a reluctance to return to in-person jobs.

By looking at how each of these factors has contributed to the Great

Resignation, we can gain a helpful understanding of the forces that are
shaping worker behavior today — and will do so for the foreseeable
future.

Retirement

Academic studies and online surveys alike have consistently found

that the Great Resignation might better be thought of as the Great
Retirement. In 2021, older workers left their jobs at an accelerated rate,
and they did so at younger ages. They made these decisions out of a
desire to spend more time with loved ones and to focus on priorities
beyond work; they made their moves with confidence thanks to surging
stock markets and buoyant residential property values; and a significant

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 HBR / Digital Article / The Great Resignation Didn’t Start with the Pandemic

older cohort also left because of their greater susceptibility to serious

Covid health risks.

This pattern is quite different from the last big crisis. During the
Great Recession, between 2007 and 2009, there was a 1.0% increase
in workforce participation among workers 55 years and older, whereas
during the Great Resignation there was a 1.9% decline.

Relocation

Stories about highly skilled knowledge workers abandoning the Bay

Area in favor of scenic resorts in the Rockies make for interesting
articles, but relocation has not played a material part in the Great
Resignation. The overall movement rate in 2021 was the lowest on
record for more than 70 years. Rates of relocation have been declining
steadily since the 1980s, and Covid has not reversed that trend.
Moreover, those people who did move disproportionately stayed local.
Moving within one’s county of residence has remained the most
frequent from of relocation; moving to a different state has remained
the least frequent.

Reconsideration

Observers have suggested that the many deaths and instances of serious
illness brought about by the pandemic have caused people to reconsider
the role of work in their lives. That shift in perspective is likely to have
motivated some workers to quit, especially those who were burning
out in demanding jobs that intruded on their ability to care for their
families. Women have been affected more than men, and younger age
groups more than older ones.

Burnout has occurred notably among frontline workers, parents

and caregivers, and organizational leaders. Turnover is a natural

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consequence. Because care obligations fall disproportionately on

women, industries such as hospitality, where women comprise the
majority for hourly workers, have seen larger numbers of quits. A
2021 Women in the Workplace report found that one in three women
are considering leaving the workforce, switching jobs, or cutting work
hours. This is often a forced choice — many women have no option
other than leaving to meet caregiving obligations.

In white-collar industries, such as consulting and finance, junior

personnel have also experienced notable levels of burnout. Such
industries have had robust demand during the pandemic, obliging
staff to work extremely hard without benefiting from the training,
mentorship, and client interaction that previously made such jobs
rewarding. Those experiences may have changed young workers’
tolerance for the demands of such workplaces.

Reshuffling

Bharat Ramamurti, the deputy director of the National Economic

Council, recently coined the phrase the Great Upgrade to refer to the
pattern of higher quit rates in lower-wage industries. Accommodation
and food services and leisure and hospitality had the highest quit rates;
retail trade and non-durable manufacturing experienced the greatest
growth in their rates. Such spikes in turnover have not been limited
to industries with a large percentage of low-wage workers. Professional
and business services also registered a high quit rate and considerable
growth in that rate.

But not all of these workers are leaving the labor market. There
is evidence that many are “reshuffling” — that is, moving among
different jobs in the same sector, or even between sectors. According
to an analysis of BLS data conducted by the Economic Policy Institute
in November of 2021, hiring rates are exceeding quit rates across

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many sectors, which suggests that high wage growth is attracting new
applicants to open positions — and that many workers are both able and
willing to accept jobs that are sufficiently attractive.

Having recognized this, some companies are taking action. An analysis

by the Brookings Institution revealed that employers in industries with
the highest quit rates have responded by raising wages sharply in
an effort to rebuild their staffs. In 2021, McDonalds increased hourly
wages for current employees by an average of 10% and raised entry-level
wages from $11 to $17 an hour. The company also improved its benefits
packages (including emergency childcare, paid time off, and tuition
reimbursement). As a result, it successfully expanded its headcount
in 2021, ending the year with higher staffing levels than it had at the
beginning.  At the same time, Walmart has announced a $1 billion
Live Better U program, which during the next five years will pay 100%
of the cost of college tuition and books for the company’s associates.
That investment, the company hopes, will not only attract workers but
improve retention.

Reluctance

Fear of contracting Covid in the workplace has made many workers

reluctant to return to the office. In a recent Pew Research Center survey
of 5,858 working adults, 64% of workers reported feeling uncomfortable
returning to the office, and 57% reported choosing to work from
home due to concern over exposure to Covid. Research reported in
the Harvard Business Review indicates that many workers are prepared
to quit if their employer does not offer a hybrid-work option: In a survey
of over 10,000 Americans conducted in the summer of 2021, 36% of
workers said that if not given a hybrid or remote option, they would
search for an alternative, and 6% reported being willing to quit outright,
even without a new position in hand.

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•••

The Great Resignation did not appear out of nowhere. Spurred on

by the pandemic, it was a natural consequence of the five factors
we’ve discussed in this article: retirement, relocation, reconsideration,
reshuffling, and reluctance. Business leaders across sectors and
industries will benefit from understanding which of these factors are
contributing to turnover in their organizations, and from developing
specific responses to stem that tide as Covid evolves from a pandemic
to an endemic disease. As that happens, companies that have the vision
and resources to offer flexibility to their employees are the most likely
to maintain a stable and competitive workforce. And the companies
best able to attract and retain talent will be those offering benefits
that address the changing needs of workers. Similarly, companies that
demonstrate a commitment to improving their employees long-term
career prospects by offering training and tuition reimbursements will
garner greater loyalty and gain in stature with prospective employees.
The Great Resignation was no anomaly; the forces underlying it are here
to stay.

Joseph Fuller is a professor of management practice and a cochair

JF of the Project on Managing the Future of Work at Harvard Business
School. He is also the faculty co-chair of HBS’ executive education
program on Leading an Agile Workforce Transformation.

William Kerr is the D’Arbeloff Professor of Business Administration

at Harvard Business School, the unit head of Entrepreneurial
Management, and a cochair of the Project on Managing the Future of
Work.

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