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Daily Brief - Admit it, you’ve thought about quitting (Oct 18, 2021)

20 million people resigned from their jobs between spring and summer. In April, the number of workers who quit their job in a single month broke an all-time U.S. record. Highest. Ever. But then it did that again in July. And again in August. People who just up and leave their job, often without having another one lined up. Are they crazy? This phenomenon - because pundits love inventing new words - even has a term now: The Great Resignation.


Who are these people? Why are they doing this?


The official term for these acts of handing in a resignation letter is “voluntary separations” (you have to admire the economists’ ability to make something so personal seem cold and factual) or “quits,” as the Bureau of Labor Statistics calls them.


Strikingly, they are rising in almost every industry. For those in leisure and hospitality, especially, the workplace must feel like one giant revolving door. In a single month, one in 14 hotel clerks, restaurant servers, and barbacks bid adieu to their job. Thanks to several fiscal stimulus checks, a rent moratorium, and student-loan forgiveness, everybody has more freedom to quit jobs they hate and hop to something else.


In August alone, 4.3 million resignations were handed in. Though August is a traditionally high turnover month (many seasonal workers go back to school) the figure sets a record since the BLS started tracking it in 2000.


This bodes ill for the “inflation is transitory” camp and could challenge the Fed’s already itchy trigger finger. Workers quitting their jobs creates churn and shortage that is often overcome with higher wages. This is because huge labor shortages are coming at the time of raging consumer demand thanks to a fiscal stimulus package that is the equivalent to 15 percent of US GDP.


Former US treasury secretary Larry Summers said he was deeply worried. Traditionally, the Fed aimed to “remove the punchbowl just before the party starts. Now the party’s gotten great and the Fed’s not removing the punchbowl until they’ve seen ... conclusive evidence that everyone’s going to get plastered.”


Drink up.