You have no doubt seen news headlines and other videos about “The Great Resignation”
accompanied by equally alarmists statistics like 40% of people are about to quit their
job and April alone saw over 4 million people hand in their resignation.
Now this news could be incredibly frightening or liberating to you depending on whether
you are a stressed out business owner or soulless corporate automaton respectively, but before
you read too much into it (or worse yet base major career decisions off of it) you should
know the full story.
So is this a serious event in the landscape of employer employee relationships?
Well those of you who watch the channel regularly will know I hate dragging out an answer…
soooo no, not really, not to vast majority of you watching anyway.
Sorry to be the party pooper, but there are a few big issues that most outlets are omitting
in their coverage of this story, either unknowingly or intentionally to make this all sound more
spectacular than it really is.
These issues are,
The normal expectations for staff turnover.
The way the data for these headlines were collected.
And the other effects of the pandemic that have been conveniently left out of the flashy
headlines.
So it’s time to learn how money works before you join the unemployment bandwagon that may
not actually exists…
…
OK so the first issue with this supposed phenomenon is that it’s not particularly phenomenal.
YES 4 million people DID quit their jobs in April of 2021 but around 3.8 million people
quit their jobs in April of 2019.
This flashy number is really not anything too far above what we expect from a normal
given month.
What might be a bigger story is the fact that double the amount of people are quitting their
jobs in a given month than they where just a decade ago, despite the overall workforce
only growing by about 30% in that same time period.
In plain English the trend has been that on average people are quitting their jobs 75%
more frequently than they were a year ago.
Now I find this interesting, but it doesn’t make for a great headline because if anything
it gives a sense of security to workers everywhere that looking around for a new job is totally
OK.
The story of millions of people quitting their jobs to go and take advantage of unemployment
benefits while they last, that’s scary.
An article that reads, “a slightly above average amount of employees have left their
jobs this month which is on line with historic trends” … Yeah, not so scary.
In fact, I have made an entire video on exactly why company loyalty is something even COMPANIES
THEMSELVES don’t care about these days.
This figure is even less of a concern when it is understood in the context of the broader
job market…
In the same month that 4 million people left their jobs, 6 million people started in new
ones.
Almost all of these “quitters” are just jumping ship to new roles where they will
be working alongside millions of totally new hires that were probably left unemployed from
early lock-downs.
The great resignation has a ring to it, but at worst it should be called the great job
hop and more realistically it should be called the great hiring.
Now there was ONE other REALLY interesting factor at play here that is certainly worth
talking about, and that was a recent executive order that called for severe limitations to
be placed on non-compete clauses in employment contracts.
Non compete agreements are clauses in employment contracts that forbid the employee from working
for another company in the same industry for a set period of time after they finish working
there.
The idea is that some employees might be privy to sensitive information like legal proceedings,
internal R&D or even something as mundane as business processes.
If a scientist is working in a lab to develop a new miracle cure to every illness ever then
the company employee that scientist wouldn’t want them going and working for another pharmaceutical
company and taking all of that hard earned research progress with them.
That’s perfectly reasonable and that’s why non compete clauses exist in the first
place.
The problem is when they start to get used on low level employees as a tool to control
staff rather than as a tool to defend intellectual property.
There have been instances where fast food workers were forbidden from working in any
other fast food chain under the guise of “non-compete agreements”.
The problem is that obviously, no fast food worker is going to be dealing with any information
that could jeopardize the their company if it fell into the hands of their competitors.
I am sure if they really wanted to these multinational corporations could figure out what goes into
a cheeseburger.
But!
If a worker wants to leave to get a better job at a competing company their manager can
just go no no no no, you aren’t allowed to do that, it’s in your contract.
This is BAD news, because as I have explored in my video on staff loyalty, switching jobs
is the best way to progress one’s career.
The truly insidious part about this whole system is that most non-compete agreements
are EXTREMELY hard to enforce.
A handful of states refuse to even enforce these contracts and of those that do there
is a heavy onus on the employer to prove damages caused by a breach of a non-compete agreement.
The problem is that minimum wage workers won’t always understand this, and they certainly
won’t have the means to fight it out in court should it ever come to that, so they
take it at face value and remained trapped in a job that can underpay and overwork them.
Now of course I am not a lawyer, if you have a non-compete in your contract don’t take
my word for it before you tell your boss to cram it before moon-walking over to a competitor.
But even still, many people have now been made aware of this by the executive and are
now checking that non-compete again and see if it really is a barrier to jumping ship.
…
Alright, the other serious problem with the idea of the Great Resignation is what these
headlines are based off of.
This whole thing started when the annual Microsoft workplace report was released in late January.
This is a report that is created in collaboration with Microsoft and the Edelman Data X Intelligence
firm, which sound super dystopian…
AND IT IS!
The report analyses trillions of data signals from across the Microsoft 365 and LinkedIn
networks and then combines those data points with a survey that is conducted amongst 31,000
participants across 31 distinct regional markets.
The data is then aggregated and insights are drawn from certain trends.
The problem with this whole thing is selection bias.
The report controls for a lot of variables and certainly the people constructing this
report are far more intelligent than I am, but there are still some issues.
The takeaway of “40% of workers could leave their job this year” is also based (at least
partially” on an anonymous survey question, “would you consider leaving your job in
the next 12 months?”
Like yeah, almost everybody would answer yes to that right?
And that’s sorta the point…
The rest of the report is filled with practical ways for managers to boost retention so it’s
not exactly going to make itself totally redundant by saying “Eh workers aren’t going to
quit, but please keep reading to find out how to get them to super not quit”.
This insight, built on an arguably pretty leading question has gone through the usual
lifecycle of media hype.
A small study presents some data to support their work, then “between 25 – 40% of
workers said they would consider leaving their jobs” gets turned into “40% of people
are about to quit their jobs” Which eventually gets turned into “The world is about to
lose 40% of it’s workforce, hashtag the great resignation.”
Now I don’t want to sound overly cynical, to be honest, I actually wish this were true,
the workforce is overdue for a good shakeup, but you can’t let what you want to be true
interfere with your judgement of what actually is, even when it comes in the form of a flashy
report from two very reputable companies.
Anyway, this probably overlooks the biggest issue of all which is…
SO WHAT?
The early stages of the pandemic saw a massive decrease in the amount of people quitting
their jobs, which was to be expected.
At this time the average worker was being bombarded by headlines about how unemployment
had spiked to over 15% and that we may be in for the greatest recession in history.
Fortunately none of that has eventuated (not yet atleast)… and the roll out of vaccines
has meant for many people life has more or less gone back to normal.
People might have been truly dissatisfied with their job at this point 12 months ago
but still held on because they had no guarantee of finding another job in the turbulent economic
conditions of 2020.
Security and self preservation was driving decision making more than fulfillment and
self advancement.
Those same people that were just holding on to ride out the storm are now free to look
for other opportunities and are actually being encouraged to with reports of it being the
best time to look for a new job in the last decade.
An 18 month backlog of workers all looking for a new job at the same time is naturally
going to increase the amount of resignation letters being handed out in the short term.
When taking this into consideration resignation numbers are actually below where we would
expect them to be on a 12 month rolling average.
The number of people quitting their jobs should actually be around 6 million, and even then
the economy would only just be breaking even on the dip from early 2020.
So no, the great resignation is nothing to be fearful of, not unless you are a terrible
manager at a horrible company I guess.
If anything it is an opportunity, if you are not at least staying open to the idea of a
new job with a higher salary and better benefits you are really doing yourself a disservice.
If you are still not convinced and think that your company will appreciate your loyalty,
go and watch my video on why they really don’t and if anything, modern companies want you
to keep on moving along as well.
If you do end up enjoying that video and you enjoyed this video, please consider liking
and subscribing to keep on learning How Money Works.