- Americans are resigning at record pace, and yet job openings sit near all-time highs.
- The prevailing idea is that unemployment benefits, stimulus checks, fear of catching the virus, and lack of childcare are responsible for potential workers sitting on the sidelines.
- Yet, once the extra unemployment benefits ended, to the surprise of economists, there wasn’t an uptick in people accepting new jobs.
Americans are resigning at record pace, nearly 8 million Americans remain unemployed, and job openings sit near all-time highs.
As quitting rates boomed, experts started calling the shift the Great Resignation. Some experts believe that the Great Resignation is less of a permanent shift and more of a temporary speed bump.
Surprisingly, experts don’t have specific answers to where workers are going or what they’re doing after resigning their jobs.
The prevailing idea is that unemployment benefits, stimulus checks, fear of catching the virus, and lack of childcare are responsible for potential workers sitting on the sidelines.
Once the extra unemployment benefits ended, to the surprise of economists, there wasn’t an uptick in people accepting new jobs. This might be because people have the means to hold out for jobs that they actually want.
If the American unemployment rate is low, where are workers?
Although 4.3 million Americans left their jobs in August alone, the U.S. unemployment rate fell to 4.6% in October 2021, the lowest since March 2020 and slightly below market expectations of 4.7%.
Unemployment insurance (UI), especially the enhanced benefits during the pandemic, gave workers some breathing room. The benefits weren’t enough for people to live extravagantly by any means though, and those people will have to return to work eventually, if they haven’t already.
UI benefits alleviated the pressure to take unsafe jobs — many of which are especially dangerous during a pandemic. Instead, workers have been able to hold out a bit longer for better-paying jobs that match their skills, education, experience, and interests.
States with higher unemployment benefit levels, as well as low-wage sectors where benefits are more often higher than previous income, have actually seen faster job growth, indicating that unemployment insurance isn’t the cause of slow hiring.
Another aspect of the labor shortage to consider is that 754,000 Americans died during the pandemic.
Should unemployment payments be higher or lower in the U.S.?
Unemployment insurance benefits are given to those who have lost their jobs through no fault of their own. Those who have quit their jobs cannot receive UI.
Many argue that unemployment benefits are too generous and are discouraging work, leaving employers unable to hire workers.
This actually is not the case.
UI benefits are not particularly generous – North Dakota has one of the highest UI rates in the nation, giving out $459 a week. This adds up to $1,836 a month. Working at an actual job for just $12 an hour could add up to more than the highest unemployment payments.
Arizona and Florida have the lowest unemployment benefit rates ($236 per week) in the country. People living off of unemployment in these states receive $944 a month.
Working a regular job would pay far more than the amount unemployment insurance pays, so there isn’t really much incentive for people to exploit UI.
Many experts even argue that UI should be increased across the country. The Economic Policy Institute has said that the current system fails to alleviate severe economic hardship, and has laid out a policy proposal that would increase the level of UI benefits, including making the benefit formula more progressive so that low-wage workers are better supported.
For people who have quit their jobs, what are they doing now?
The $5 trillion that the government spent in pandemic-era stimulus gave many low-paid Americans a financial buffer through direct payments and boosted unemployment insurance.
This has allowed people to be choosy with what kind of jobs they want to take.
Once this financial buffer runs out, those people will return to the workforce and create a hiring frenzy, according to Daniel Alpert, managing partner at Westwood Capital and a senior fellow of macroeconomics at Cornell Law School.
It makes sense that so many jobless Americans are biding their time; most of them left low-paying jobs. Leisure and hospitality, administrative and temporary services, and local government sectors count for nearly 60% of the jobs that haven’t been recovered. Many of those pay below the national average, and people want better pay for themselves now and are willing to wait.
These workers are pushing back against poor pay, unpleasant working conditions, and a lack of respect from management. Those who have quit are taking their time to seek out new types of opportunities that offer meaningful work and a path to advancement.
The pandemic also accelerated retirement, particularly among those aged 59 and older, which means the workforce lost that significant group as well.
So, to answer the question of where American workers are – they are waiting for better opportunities, they have retired early, and some have died due to COVID-19. While this may seem grim, the U.S. will recover and the labor shortage is predicted to end soon.