‘Retirement’ means that the rate of quitting one’s job will increase from the end of 2021. Looking at the graph, it looks pretty good. This graph is monthly We can see that the blue line, the rate at which workers voluntarily leave their jobs (and therefore does not include retirements, health issues or layoffs) peaks at 3% per month, which if you do the math, is 40% of the workforce over 12 months. of employees will have quit their jobs. Additionally, we have seen a gradual increase in ‘attrition rates’ since the end of the Great Recession in 2009.
Ryan Michaels presents three possible explanations in “What Explains the Great Resignation?” (economic insight: Federal Reserve Bank of Philadelphia, 2024: Q2, pp. 10-18).
In the graph above, the blue line is the ‘quit rate’ calculated from the JOLTS (Job Opens and Labor Turnover) survey conducted on 21,000 workplaces. The red line is data from the Longitudinal Employer and Household Dynamics (LEHD) dataset, which includes nearly all workers and firms, but only quarterly rather than monthly. The advantage of LEHD is that it can track whether someone has transitioned directly from one employer to another. The downside is that LEHD data doesn’t tell us whether workers voluntarily quit to find another job or just stayed on the job because they were laid off. I found another job very quickly.
Michaels suggests three reasons why smoking cessation rates have increased:
According to fast growth According to the narrative, the increase in quitters was a byproduct of the rapid economic recovery in 2021-2022. According to work from home According to the story, quits have increased because more workers have switched to remote jobs. And according to property According to the narrative, a surge in household savings during the pandemic has allowed workers to spend more time away from paid work, leading them to quit their jobs.
After analyzing labor market movements by industry and demographic group, Michaels concluded:
Higher retirement rates were observed across all industries and demographic groups, but the rates rose particularly sharply for younger workers, women, non-whites, and workers without a college education. Many of these workers switched directly to other employers, but many left the workforce entirely. This suggests that changes in both labor supply (as explained in the wealth story) and demand (as explained in the rapid growth story) have contributed to the increase in retirements. … The rise in retirees has been fueled by rising demand for labor and weakening labor supply, which combine to put upward pressure on wages. The acceleration of wage inflation appears to have ultimately led to rising prices.
