1 Big Reason So Many Americans Are Quitting Their Jobs

If you've been hearing a lot about 'The Great Resignation' lately, you're not alone. Why and how are so many people quitting their jobs, even as inflation lingers, we enter another pandemic year, and the unemployment rate is declining? In this segment of Backstage Pass, recorded on Jan. 5, Fool contributor Rachel Warren dives into one of the major reasons that may explain why so many people are disappearing from the labor market right now. 

Rachel Warren: There are so many factors that are driving this period that has been termed The Great Resignation. I think the fact that you do have a lot of older workers retiring is definitely a huge part of that. Something we discussed on the show before the holiday was how some older workers were forced into retirement in the pandemic and then some chose to retire just saying, I think I'm done, my retirement savings are good.

This is not a great time to be working and left the workforce. Then in some cases, you had people who were pushed out of their jobs, and then when things were looking better with the pandemic some of these companies then did not go to tap into that older workforce. That's one aspect we've been seeing there.

Another thing and I think one of the most obvious things we think of and that has been discussed here as well is people are leaving to maybe turn their side hustle into their full-time job. People are freelancing, people are turning to gig work.

There was a very interesting report that The Wall Street Journal released at the end of last year, citing a variety of sources from the U.S. government as well as other sources.

Well, one of the interesting things that stuck out to me from the report was that the Labor Department data showed that there were "500,000 more unincorporated self-employed workers than there were at the start of the pandemic".

In addition to that, the report also found that "the number of new applications for federal tax ID numbers jumped 56% between 2019 and 2021. Two-thirds of those applications for federal tax ID numbers were for businesses expected to employ nobody other than the founder."

Another interesting thing from that report, the percentage of workers in the U.S. who consider themselves self-employed rose from 5.4% in February 2020 to 5.9% now.

We've been talking a lot about how more people are freelancing. You look at platforms like Upwork and Fiverr, for example, that are very common places for people to go and find gig work.

Well, in May of last year, Fiverr released its annual Freelance Economic Impact Report. I would expect to be seeing one for the full-year 2021 out here in the next few months. But this one based on data from 2020 and "based on a review of over 20 million tax returns, revealed that there were over six million skilled freelancers working in creative, technical, or professional positions in the U.S.", and those freelancers earned an estimated $234 billion in revenue in 2020.

One of the things that freelancers cited in this report as their reasoning for freelancing was the flexibility and freedom that that allowed. "Eight in 10 skilled independents believe their work gives them the freedom deliver ever they want and choose when and where they work" according to this report.

I know for me when I started freelancing a few years ago, even before I joined The Motley Fool as a contractor, that was a huge reasoning behind why I chose to go from my traditional corporate legal background into freelancing.

It has been probably one of the best choices I ever made. I think it's a positive thing that we're seeing in some cases, that more people are taking charge of their lives and careers and are having more flexibility in how they live and work.