Workers are quitting because they want higher wages. Employers are finally starting to listen.
- Over the past year, wages have been skyrocketing as employers complain they can't find workers.
- After substantial growth, wages seemed to cool a little in February, but hiring still boomed.
For months, a common refrain has been that nobody wants to work anymore.
Indeed, over 4 million Americans have been quitting every month for eight months now. It's a trend that's seen little sign of slowing down. But that doesn't mean people aren't working — hiring is still strong. In January, US employers hired nearly 6.5 million workers.
The data consistently shows that quits are high in the lowest-paying sectors. The quit rate for leisure and hospitality, historically one of the lowest paying sectors in the US
At the same time, wages have been skyrocketing over the last year. In February, hiring was strong as wages stabilized — suggesting that the average hourly
In simpler terms, as wages grow, so too does the number of people racing back to work.
Wages were stagnant pre-pandemic, but low-paying jobs were booming
Before the pandemic, wages and salaries as a share of Gross Domestic Income had been on the decline for decades. The story of the recovery from the 2008 recession was one of low-wage jobs, with, as the Washington Post reported, middle-class jobs morphing into low-wage roles.
A 2014 report from the National Employment Law Project found that low-wage industries accounted for 22% of employment losses in the 2008 recession — but made up 44% of growth during recovery. At the same time, "mid-wage" industries were 37% of the losses, and just 26% of recovery. In other words: Low-wage work was less hard-hit, and exploded in the recovery recession, while middle-wage work took a beating and did not fully recover.
As Insider's Andy Kiersz reported, in 2019 the economy looked great — but it didn't feel so good. Unemployment was low, and GDP was high. But income inequality was on the rise, student loan debt was soaring, and the cost of medical care had skyrocketed.
Then came the pandemic.
Low-wage workers disproportionately lost their jobs, and saw a slower recovery, according to research from Brookings. At the same time, millions of Americans — including former low-wage workers, who had to previously contend with unreliable schedules and pay — received beefed up unemployment benefits. In some cases, those checks were more than they had previously earned. Workers said that was an issue with the wages they were offered before, not generous benefits.
"These guys are just dumbasses if they actually think that the UI is the problem and not the wage," Matt Mies, an unemployed 28-year-old, told Insider in May 2021.
For the workers who stayed in their low-wage roles, many were suddenly forced onto the frontlines. Hazard pay ended for many workers after just a few months. As the pandemic trudged on, fewer workers than would have usually quit threw in the towel.
Now, the lowest-paid workers are leaving en masse for higher pay
But then spring rolled around.
As the economy began to recover, low-wage industries like leisure and hospitality led the way. But wage expectations had changed.
The reservation wage — the average lowest wage that a job seeker would accept for a new role — started to tick up. As of November 2021, workers without a college degree wanted about $60,000, according to data from the Federal Reserve Bank of New York.
At the same time, workers began to quit at a record-breaking rate in April 2021 — and they haven't stopped yet. Quits have been particularly concentrated in low-wage industries, with a record of almost one million restaurant and hotel workers quitting in November 2021. There were 881,000 quits in November for this industry after annual revisions.
The workers quitting are saying they're leaving over low pay and the inability to advance, according to a recent survey from Pew Research Center of US adults who quit in 2021. Over half of those who are in new jobs said they're taking home more money now.
And, after months of skyrocketing wages, the booming number of jobs added in February — along with the tempering of wage growth — suggests that workers might finally be taking employers up on what's an adequate wage.
"I think a lot of those jobs, the wages increased, but the jobs weren't filled, so people are benefiting from going into those jobs that were unfilled," Secretary of Labor Marty Walsh told Insider after the release of February's jobs data. "They're still seeing wage increases."
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