- The "Big Stay" is driving increased productivity as fewer workers are quitting their jobs compared to two years ago.
- A contrast to the Great Resignation, the trend is leading to employee retention and satisfaction.
- The productivity boost is aiding economic growth and could lower inflation.
Productivity for many companies is soaring — all thanks to the "Big Stay."
The phenomenon, in which fewer employees are quitting their jobs compared to two years ago, has positive implications for the economy. Companies retain more employees, and lower labor churn increases productivity and skilled institutional knowledge.
The quit rate has sunk below pre-pandemic levels. This past January, three million workers — just 2.1% of the US workforce — quit their jobs, according to US Bureau of Labor Statistics.
That's in stark contrast to January 2022, when 4.3 million people quit their jobs as part of the Great Resignation. The US quit rate peaked between late 2021 and early 2022 at 3%, with mid-career tech and healthcare professionals being the largest demographics leaving their employers.
There are a couple of reasons workers have shifted to the Big Stay, Glassdoor Chief Economist Aaron Terrazas told Business Insider. Fewer companies are hiring, he said, and workers see less opportunity outside their current employers.
Employees tend to feel more satisfied with their work-life balance, hybrid work flexibility, and compensation than they did at the height of the pandemic, per a May 2023 study by The Conference Board, a nonprofit and nonpartisan think tank. However, recent return-to-work mandates might lead to dwindling levels of employee happiness.
The Big Stay is very real, Terrazas said, but it shouldn't be overstated.
The US economy added 275,000 jobs last month, but the job market recovery from the pandemic is slowing. While still historically low, unemployment is at a two-year high — and many job seekers, especially office workers, feel they have limited options.
"People are staying in their jobs for lack of alternatives, not because their current job is such a wonderfully satisfying fit," Terrazas said.
The Big Stay has benefits, but they may be short-lived
Terrazas said lower quit rates are giving way to high productivity across companies. And this overall productivity boost serves companies looking to raise profits. In theory, lower costs of production could also help companies moderate price increases, lowering inflation for shoppers.
The Bureau of Labor Statistics data shows that when employees are more productive, they produce more goods and services at lower prices. The Bureau also found that productivity for nonfarm US businesses increased by 3.2% at the end of last year.
It's too early to tell if the productivity bump will translate to lower food and clothes prices, but the cost of many durable goods like cars and household equipment is shrinking. The Federal Reserve is looking to cut interest rates this summer, which could make mortgages more affordable in the next few years.
While Tuesday's inflation report came in slightly higher than expected, overall inflation has been easing since June 2022.
The employment cost index, a measure of change in the hourly labor cost to employers over time, also decreased in 2023.
At the same time, job openings have tumbled since post-pandemic highs, forcing a lot of workers to stay in their roles. Terrazas predicts that there could be another wave of quitting once market conditions change and companies begin to hire more. He said many jobs are "frozen in place," and there's a lot of quitting demand beneath the surface of the economy.
If companies want to continue retaining talent, he expects they will need to reward high performers, raise wages to match higher productivity, and make employees feel valued.
"I do think there is this pent-up pressure underneath the surface of the job market, almost like pressure building in a tectonic fault," Terrazas said. "No, we haven't seen the earthquake yet, but the pressure is building. And sooner or later, once the market opens up, that energy is going to release itself."
Are you a millennial or Gen Zer planning to stay at their job long-term? Are you willing to share what factors are informing your career decision? Reach out to this reporter at [email protected].