We're living in unprecedented times. Even as companies around the country (and the world) are clamoring to hire new talent, workers are quitting their jobs at an astonishing pace. Is this trend going to slow down anytime soon? Or are we seeing a permanent change in how people approach the work/life balance? In this segment of Backstage Pass, recorded on Nov. 19, Motley Fool contributors Toby Bordelon and Nicholas Rossolillo discuss some of the compelling stimuli that are continuing to drive "The Great Resignation."
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Toby Bordelon: We've heard about "The Great Resignation," people quitting their jobs. Recently, we got a report from the September numbers which told us 4.4 million people quit their jobs, it was a record, so they've been keeping track of this.
But today, I saw an article, I think it was on CNBC that talked about a report from Jonathan Miller, who's an economist at Barclays, questioning the motivation behind his resignation. He wonders if it's just short-term and noted in September, the hiring actually exceeded the number people who quit. We had 6.5 million people be hired, which is a difference of two million.
So two million more people started jobs than quit jobs. His theorizes that these resignation are driven more by short-term concerns, COVID related, mostly things like risk of infection or lack of child care. That's hard to get right now.
In other words, he doesn't know if workers are really disgruntled but that, they're being driven out by short-term practical concerns and so maybe that's just a short-term issue. Another piece of data shows that some of the people leaving labor force are married and living with their spouse. You might quit your job and the family unit still has income. That can bridge the gap between when you get a new job.
If you're married and your spouse is working, then you have a lot more leeway. It's not like you're operating on savings. You just may be operating at a lower income while you look for a new job. So maybe it provides more motivation to just not wait and take the lead now. But what do we think about this guys?
What are your thoughts on this? Thoughts in the labor force, people quitting. What do things look like next year? Do you think this is just short-term? This trend, do you think it's going to normalize or we get to new equilibrium? What do you think about this? What do you think, Nick, why don't you start us off with this?
Nicholas Rossolillo: Yeah, I saw that report. I definitely think there are some short-term reasons why people are quitting and causing this great resignation. But I want to share a chart with some data collected by the U.S. Census Bureau. It's actually been around for a while now. I'm shocked it gets so little coverage.
This is the pace of new business applications in the US. This chart, when I saw it last year. It was my chart of the year last year. It's going to be my chart of the year this year and I think it's going to continue at least partway into 2022.
This is incredible. Look at how many people have applied to start a business. You see this little dip rate here. The yellow is what the census deems a high propensity application like this is definitely going to be a business that sticks around for a while versus the gray, they deem it a business that has a high likelihood of not making up.
Either way, this chart's incredible. There were so many new businesses being started since the brief dip when the pandemic started, but very quickly, just a couple of months after that, the monthly pace of new business applications is just incredible.
I think it just illustrates the fact that it's gotten so easy to work for yourself, either as a contractor, where you can work more flexibly. You might still work for a business, but on your own terms or just outright start your own business.
A lot of people, this chart is interesting because it's just a story in a microcosm. It helps explain some of the housing shortage because people are moving to less expensive areas of the country so that they can do things like world less and maybe work for themselves. It helps explain some of the inflation because businesses are having to pay more to try to attract talent. It just explains so many things.
I don't think it's just a short-term effect. Because it hasn't been a short-term effect, it's been happening for almost two years now. We're not talking about a short-term trend anymore. Come on, Wall Street, get with the program here. [laughs] Not new news.