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Mondays with Rick: Examining the Great Resignation

Gary Kauffman

 

Dr. Rick Franza, Dean of the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, with Labor Day coming up, he talks about the reasons behind the Great Resignation and its effect on the labor force. The interview has been edited for clarity and impact.

Dr. Rick Franza, Dean of AU’s Hull College of Business
ABD: During and after the pandemic, a lot of workers dropped out of the workforce – some estimates as high as 47 million – which has been dubbed the Great Resignation. What caused that?

Rick: There were a lot of things, many of which had to do with the pandemic. I see it as four categories of people. The first category is that a lot of older people decided to retire early. They seemed to think, “I don’t want to get sick and die,” so they retired sooner than they had been planning to. That was definitely a factor. Although with inflation the way it is some of them are coming back to work.

Another category was a group of people who were getting free money from the government and thought, “This is pretty good. Why should I go back to work?”

A third group re-evaluated their priorities. People had a lot of time to think during the pandemic. They thought, “Man, my work-life balance is out of kilter.” That caused people to switch jobs.

And a fourth group is just entering the workforce, so they’re constantly looking for the best deal.

So I don’t think the Great Resignation is just people leaving the workforce. They’re dropping out of one job and going to the next job, but they’re taking their time to do it.

ABD: According to some researchers, the biggest percentage of people in the Great Resignation were workers who were in mid-career and middle management.

Rick: That fits into the work-life balance. They’re finding they’re not getting enough return for the time they’re investing in their jobs.

With more than double the number of children being homeschooled, there has been a corresponding number of parents dropping out of the workforce.
ABD: The percentage of children being homeschooled, jumped from 3 percent pre-pandemic to now at least 8 percent, with some estimates as high as 11 percent. How has that factored into the Great Resignation?

Rick: That’s significant and there’s another factor – there’s less childcare available. During the pandemic, one of two parents in some families left the workplace to care for the children and didn’t return. Some don’t want to send their children back to school for fear of the pandemic, and some because of the fears of the controversy surrounding wokeness.

ABD: Even though it seems that middle management is where a lot of the Great Resignation took place, we tend to observe it more in entry-level jobs, like restaurants and small retail establishments. Why is that?

Rick: I think people in those jobs are moving around a lot. The place where that’s an issue is where retention rates were terrible to start with. There are plenty of places where that’s not an issue.

ABD: There’s talk of a recession coming up when the workforce is traditionally cut back. How will that play out when there are already more job openings than workers?

Rick: It’s so hard to say. We’re in a period when it’s as unpredictable as it’s ever been. We’ve never seen such job growth in a recession. It’s nuts. It’s an anomaly.

A recession is typically when layers of management tend to disappear. Accountants and people in sales never lose their jobs. People are playing musical chairs with jobs but eventually, the music is going to stop and there won’t be enough chairs for everyone. From a worker’s standpoint, now is the time to prove your value. You want to be one of the ones they keep.

In my observation of college students here and at my daughter’s college, I see a bifurcation – one group of students is highly motivated and career-oriented, and another just doesn’t care. What leads to a shortage of workers is that those in the first group are all fighting for the same jobs. We’re working hard with our students in the business school on professional development, so they won’t fall into the latter category.

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