There has been a lot of talk about the ‘Great Resignation’ and its impact on the US job market.
The latest figures from the US Bureau of Labor Statistics (BLS) found that resignations remained high. For the latest month available (February 2022), 4.3 million quit their jobs.
This brings the quit rate to 2.9% and means February resignations were only slightly lower than November’s record of 4.5 million.
The US also saw more job creation in March 2022 – according to the BLS, there were 431,000 new jobs created, but this fell short of Bloomberg estimates.
However, the ‘Great Resignation’ is affecting countries on the other side of the Atlantic, including the UK.
The Office for National Statistics (ONS)’s latest figures for January to March 2022 found that job vacancies continued to increase. In fact, they have reached a new record of 1.29 million; the figure for the previous quarter (October to December 2021), was 1.25 million.
In good news, the rate of job vacancies growth has slowed – there was only a 50,200 increase between January and March, and this was mainly in health and social care.
— Office for National Statistics (ONS) (@ONS) April 12, 2022
It is clear that UK and US employees are still voting with their feet and leaving jobs that are not right for them.
Inside the employment situation in the UK and the US
It is important to remember that BLS and ONS figures focus more than on resignations; they look at the employment situation as a whole.
In the US, the unemployment rate declined by 0.2 percentage points to 3.6% – this brings the number of employed individuals in the US to 6 million, thereby almost reaching pre-pandemic levels of 5.7 million.
The UK’s unemployment rate also declined 0.2 percentage points, but the percentage sits higher than the US at 3.8%. The decline was seen in both those unemployed for less than a year and those who are long-term unemployed.
In the UK, the employment rate remained unchanged at 75.5% – and the number of pay-rolled employees in March 2022 reached a record 29.6 million.
So far, so good for the economy. But the ONS found that the UK’s economic inactivity rate increased by 0.2 percentage points to 21.4%. “This increase was driven by those who are economically inactive because they are looking after family or home, retired, or long-term sick,” according to the ONS.
In this context, while wages are on up in the US and the UK, they are not keeping up with inflation. In the US, average wages grew by 13 cents to $31.73 per hour; over the past year, wages have increased by 5.6%.
In the UK, while the growth in average pay (including bonuses) between December 2021 and February 2022 was 5.4%, when adjusted for inflation this was only a 0.4% increase.
Even more worryingly, the increase in real earning (excluding bonuses) was only 4%; when adjusted for inflation, this meant employees were losing 0.1% of their wages this quarter.
So the US and UK high quit rates (one major cause of which is low pay) are now coupled with this extra pressure on employees’ finances. So it is time that employers step up and ensure their workers can pay their bills at the end of the month.
This could be raising their wages, introducing a one-off bonus, offering them early access to the wages before payday or providing free access to financial advisers. Doing something is better than doing nothing, particularly in the current economic climate.