The Great Resignation: What It Is And What It Means For You
Posted October 28, 2021
We’ve been navigating an unknown world, adapting to new normals, and facing unexpected challenges for nearly two years. The latest challenge and unprecedented circumstance for business owners are what many are calling The Great Resignation.
In August, 4.3 million American workers quit their jobs (Source: NPR). Anthony Klotz, an organizational psychologist at Texas A&M University, says the pandemic allowed workers to evaluate whether or not they were truly happy with their life.
“During the pandemic, because there was a lot of death and illness and lockdowns, we really had the time and the motivation to sit back and say, do I like the trajectory of my life? Am I pursuing a life that brings me well-being?” Klotz said.
With the Great Resignation, we see that the answer to that question was no for many Americans. The ripple effect is now making waves, and the Great Resignation is impacting both the supply and demand for labor.
How The Great Resignation is Impacting The Supply Side of The Labor Market
During the pandemic, many people began to take a step back and reevaluate what was truly important in life. This led some people to retire early; others were inspired to start their own business, while still some were left questioning what they were working toward.
Perhaps the last two years have made you question your work-life balance as well. Are you now looking to retire early and wondering if you have the financial means to do so? Are you a business owner looking to retire but have no idea what your business is worth and have no exit plan in place?
Maybe you’re not close to retiring but still are questioning what’s right for your family. Perhaps you have school-aged children and want to transition to a single-income family so that one parent can stay home with the kids permanently. Are you worried about having the financial means to support your family for years and still being able to retire comfortably when the time comes?
Or maybe you’ve realized that life is short, and you’re not waiting another day to launch the business you’ve been dreaming of for years. You have no clue where to start. You aren’t sure how to make wise investments. You realize that being a small business owner takes blood, sweat, and tears, but you want to keep a pulse on the value of your business and watch it grow. Where do you start?
The Great Resignation has led to all of these questions and more on the side of labor supply. People are retiring earlier than intended, others are quitting their jobs, some are starting new businesses, and almost everyone’s head is spinning.
But it’s impacting more than just the supply side of the labor market; it’s also affecting the demand side of the labor market.
How The Great Resignation is Impacting The Demand Side of The Labor Market
When 4.3 million people quit their jobs in one month, you can guess that there will be a high demand for new employees. If you’re driving down the road, it’s not unlikely that you will see billboards and banners with the words “NOW HIRING” in giant, bold print.
“More and more small business owners are struggling to find workers for their open positions,” NFIB Chief Economist Bill Dunkelberg said. “For most small employers, labor costs are the largest operating outlay, and owners will be compelled to pass those costs on to their customers by raising prices.”
Labor shortages are not only bringing increased prices but also delays.
Whether it’s taking longer for you to get your food at your favorite restaurant or you started Christmas shopping in October to avoid shipping delays, you see the lingering effects of The Great Resignation in your day-to-day life.
What Does This Mean for The Economy?
It’s a tumultuous time with The Great Resignation running rampant throughout the country, and it’s difficult to predict what this will mean for the economy in the long run.
It could cause the economy to slow down in some sectors if positions remain open for too long. Or, it could lead to inflation if business owners are forced to raise their prices to meet the higher wage demands.
At Thayer Financial, we do not know for sure what the future holds, but we can help you create a strategy that will carry you through whatever is next.
Whether you are a business owner seeking guidance on how to balance the labor shortage and meet higher wage demands or you’re a business owner who is now looking to retire early, the team at Thayer Financial can help.
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