A Record 4.3 Million People Quit Their Jobs
The reasons are myriad, but it’s all part of an economic picture of malaise.
Where are all the workers? We asked that question upon seeing yet another disappointing jobs report last Friday. The labor market is, after all, still five million workers short of pre-pandemic levels. Well, yesterday the Labor Department reported that a record 4.3 million people quit their jobs in August. Why?
Job openings were revised upward to 11.1 million for July, but dropped to 10.4 million in August. As MarketWatch reports, maybe the openings themselves are the reason for the quitting: “Generally more people quit when the economy is doing well or they think they can find a better job.” With employers paying more and increasing benefit offerings, workers are switching jobs by the millions.
Some of the details indicate just that. CNBC reports, “A total of 892,000 workers in the food service and accommodation industries left their jobs, while 721,000 retail workers departed.”
Still, it seems to be a bit of a conundrum that 4.3 million folks quit while openings decreased, but it could represent a slowdown in economic activity, at least in some sectors, reducing the need for workers. That’s hardly a good thing.
There’s also a great deal of COVID upheaval. CNBC says the quitters include “534,000 in health care and social assistance,” a great number of whom are probably unvaccinated and choosing to quit rather than comply with mandates. Moreover, the quitting corresponded with a rise in COVID cases and schools closing or going “hybrid” or even just individual kids being sent home for quarantine. Someone has to stay home with young kids. Indeed, while 194,000 jobs were created in September, women actually lost 26,000.
Another factor worth mentioning again is the enhanced unemployment benefits that often paid more than a job. That all ended nationwide in September, but only a week before data was collected for the jobs report, meaning it’s too early to tell what effect that had. And there are still plenty of jobless incentives provided by the government.
The market may be more permanently changing, too. “Labor scarcity combined with customer demands will motivate employers to shift even faster to adopt automation and labor-saving technologies,” writes George Mason University’s Michael Farren. “This could lead to the last unemployed workers discovering that the jobs they were holding out for have evaporated. A classic case of the early bird being right after all.”
He adds: “We should also consider that perhaps the economy has entered a completely new paradigm — one in which a subset of workers have discovered that they can get by on very little, and who view lots of leisure time as a sufficient tradeoff. After all, preferences change, and markets change with them.”
Regardless, the critical labor shortage is causing supply shortages, which is driving up prices at the highest rate since 1991. The consumer price index rose once again in September, and the year-over-year inflation measure is now 5.4%. Meat prices are up 12.6% since last year, driving a lot of that $175 in additional monthly expenses we recently reported American families are facing.
Shortages of everything from semiconductors to new cars go along with cargo ships sitting unloaded offshore because there aren’t enough workers to unload them and because there aren’t enough truckers to move products around the nation. The supply malaise led a White House official to warn that Christmas stockings might be a little thin this year: “There will be things that people can’t get.”
This isn’t the America Joe Biden promised he’d deliver. If his successor would be any better, we’d suggest it’s time for him to quit.
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