The “great resignation” will soon grind to a halt.
Last year, more than 4 million people left their jobs each month in the U.S. — but in 2023, there will be less job hopping and fewer counteroffers as the demand for talent and supply of available workers evens out.
Resignations and job openings seem to be plateauing, a sign that labor shortages are starting to slowly abate, Anthony Klotz, an associate professor of management at University College of London, tells CNBC Make It.
Klotz coined the “great resignation” in May 2021 to describe the sudden wave of people quitting their jobs due to the Covid-19 pandemic, which led many to re-think where, how and why we work. The record-breaking trend dominated headlines in 2021 and 2022 as turnover continually reached new highs.
Now, as the U.S. faces the threat of a looming recession, Klotz says quits have slowed to the point where “it’s like the pandemic never happened.”
Companies are improving employee retention
To attract talent in a perennially tight labor market, many employers have introduced flexible work arrangements, increased wages or revamped their benefits.
The ripple effects of the “great resignation” prompted more companies to prioritize existing employees’ well-being, whether it’s through enhanced mental health resources or transitioning to a permanent hybrid model.
These improvements are reducing turnover: In 2022, companies that invested in employee development saw a 58% increase in employee retention, according to a recent report from HR Digest.
In 2023, Klotz says he expects employers to double down on their efforts to attract and retain talent. More than two-thirds of U.S. employers are planning to enhance their employee benefit offerings sometime over the next 12 months to attract and retain talent, according to July 2022 data from the consulting firm Mercer.
“If you’re getting what you want from your current job, there’s less incentive to quit,” Klotz explains. “We can’t discount the fact that millions of jobs are better now than they were three years ago, thanks, in large part, to the policy changes companies have made.”
Job seekers are losing confidence
Job seekers’ optimism is dwindling following months of high inflation and headline-making staff cuts across Big Tech — and people are less likely to quit without a new job lined up, Klotz says.
More than 30% of workers reported sagging confidence in their job search, a 10% increase from just a year earlier, according to a recent Monster survey of more than 1,000 respondents.
In the wider economy, companies such as Goldman Sachs, Hasbro and Spotify have resorted to layoffs, buyouts, furloughs and other cost-cutting strategies ahead of a likely recession.
If all companies are doing the same ahead of a downturn, switching roles won’t necessarily guarantee better job security.
A recession would “no doubt” reduce the number of resignations we’re seeing in the U.S., Klotz adds. That’s because in most cases, when people quit, “it’s because they have another job lined up,” he explains. “But as more companies reduce hiring, job seekers will have fewer options, and quitting becomes harder to do.”
Still, Klotz stresses that the power hasn’t completely shifted from employees to employers just yet, noting that health care, retail, transportation and other industries are still feeling the acute effects of the “great resignation and continuing to hire to combat labor shortages.
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