Written by Technically Media CEO Chris Wink, Technical.ly’s Culture Builder newsletter features tips on growing powerful teams and dynamic workplaces. Below is the latest edition we published. Sign up to get the next one.
Surging employee departures and staff-wide salary bumps don’t only happen during pandemics. This has happened before.
“The Great Resignation” of the last 18 months is just a reminder that we haven’t experienced such a fast economic recovery after a recession in decades. It has a lesson for company builders today.
The “quit rate” metric that has been at historic levels has only been tabulated since 2000 — long enough to follow two other recessions, but both featured relatively slow economic rebounds. When other data is stitched together to create a longer time horizon, speedy rebounds like those in 1948 and 1973 feature comparable rates of quitting.
This nuance on elevated employee turnover comes from a paper published this month by the Federal Reserve Bank of San Francisco. In it, economist Bart Hobijn dispels several myths of the moment.
For one, he argues that this pandemic era might be better understood as a “great renegotiation,” in which a rapid economic rebound resulted in cascading employment competition. One employer poaches from another employer who poaches from another and so on. It isn’t quite right to imagine hordes of burnt-out professionals quitting without recourse — never mind that many of us might know a friend who did just that.
Secondly, Hobijn argues there is no evidence of mass career changers — even if we really might want to help more Americans transition into higher-demand technical roles.
“There was not a particularly large increase in the share of job quitters that changed either industry of employment or occupation,” he wrote. No, we didn’t all follow our passions.
Last, Hobijn notes that those quitting the most were younger Americans in lower-paying jobs, like in retail, hospitality and tourism — all sectors that were especially crushed by pandemic lockdowns. Once they opened back up, these industries had a revolving door of employment.
To employers gasping after surging employee turnover, this all may seem unnecessarily academic. Who cares if a surge like this happened 50 years ago if it is kicking my butt right now?
What is a tech employer to do? Adapt, for one.
And, to be clear, it isn’t done kicking your butt. The most recent numbers show quit rates are still elevated. They are the highest in industries with lower wages, but businesses in information technology, professional services and other knowledge work don’t have it easy. Mid-career tech workers really did make a stand — albeit less frequently than baristas and bartenders. Demand for more workplace flexibility and wage inflation are real obstacles, even if other sectors have it worse — and no matter if we’ve been here before.
What is a tech employer to do? Adapt, for one. Answer key questions: Why is this company a great place to work, and for what kind of person is it the best place to work? After decades of “declining worker power,” a period of employee power is welcome. Those worried about its sustainability should remember that this too shall pass.
The advantage of having been here before is we might get a clue of how the future plays out. As the Federal Reserve Bank attempts to cool down an economy without bringing on a recession, employers might rightly ask, how long must I endure routine resignations and mid-cycle salary-match demands?
“These upward pressures on wages wane as the fast employment recovery slows down, the job openings rate tapers off, and the fraction of workers being poached by competitors declines,” Hobijn wrote. “It might take until late 2022 before this happens, however.”