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The pandemic-era trend known as the “Great Resignation” is still red-hot, as workers enjoy the perks of record-high demand for their labor.
However, economic headwinds mean those benefits may not last much longer, according to economists.
A record 4.5 million workers quit their jobs in March, edging just above the previous high-water mark set in November, the U.S. Department of Labor reported Tuesday.
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Voluntary separations are elevated as workers are enticed by ample choice and better pay elsewhere.
There were 11.5 million job openings at the end of March, breaking December’s record of more than 11.4 million openings, according to the Labor Department. Job openings reflect business’ demand for workers.
The layoff rate also hovered near historic lows in March, as employers clung to their respective workforces. The ration of unemployed individuals to job openings also touched its lowest on record (at 0.5 unemployed per job opening in March), according to U.S. Bureau of Labor Statistics data dating to 2007.
Hourly wages grew at a 6% pace in March, higher than any level dating to at least 1997, according to data compiled by the Federal Reserve Bank of Atlanta. (The data reflects the three-month moving average of median wage growth.)
“We are seeing massive demand for workers,” said Julia Pollak, chief economist at employment site ZipRecruiter. “This is a labor market that is more of a job seeker’s market than any we’ve seen.”
The pandemic created an imbalance between the supply of workers and employer demand for labor.
Demand started rising early in 2021 as Covid-19 vaccines were distributed more broadly and the U.S. economy started reopening. But workers didn’t rush to fill those open jobs for many reasons, including ongoing health risks.
That dynamic led employers to compete for available workers by raising wages. Employees found it easier and financially beneficial to switch jobs. Over 47 million people voluntarily left their jobs in 2021, an annual record.
Job seekers have more opportunity to go find jobs that pay better, offer better benefits or quite simply are a better fit.
Daniel Zhao
senior economist at career site Glassdoor
Initially, certain industries like leisure and hospitality experienced the tight labor market conditions most acutely, according to economists. (That industry category includes bar and restaurant jobs, which tend to be in-person and lower-paying.)
However, those conditions have broadened to other segments of the economy in the last few months, according to Daniel Zhao, a senior economist at career site Glassdoor.
“The high level of demand means job seekers have more opportunity to go find jobs that pay better, offer better benefits or quite simply are a better fit for them,” Zhao said.
The job seeker’s market will likely moderate in coming months, though probably at a level that’s still beneficial for workers, he said.
However, war in Ukraine, the ongoing pandemic and Federal Reserve monetary policy are factors that may rein in the good times. The U.S. central bank is raising interest rates to cool the economy and fight persistently high inflation. Inflation has more than offset the raises many workers have gotten.
“In the next few months, the hot job market isn’t going anywhere,” Zhao said.
“[But] this is the time to take advantage of the tighter labor market for workers because there’s no guarantee these conditions will persist,” he added.