The Great Reallocation is upon us.
The economy post-pandemic is likely to look quite different from that pre-pandemic. Covid-19 destroyed hundreds of thousands of businesses, but it also created hundreds of thousands of new ones. It transformed people’s preferences about where they live and shop. And in many ways, the economy has adapted to give Americans more options.
Nowhere is this truer than the job market, where workers are getting choices, and chances, they never had before.
Initially, workers seemed to be sorting into new careers out of necessity; two-thirds of unemployed workers in January said they were seriously considering changing their occupation or field, presumably so they could get a paycheck again. Increasingly, those switches look like deliberate choices — made by those who already had secure employment — in response to better opportunities.
In April, nearly 4 million people quit their jobs, the highest level of monthly “quits” since the government began keeping track two decades ago. Resignations were especially high in retail, an industry known for low pay and difficult working conditions.
Perhaps counterintuitively, high levels of resignations are a sign of optimism. Workers feel confident enough to quit because they know other positions are out there — positions with better pay, more flexible hours, maybe even more rewarding responsibilities. Quitters, it seems, can indeed prosper. That’s partly because lots of businesses are scrambling to scale up at once, and partly because so many Americans who’d normally be competing for those vacancies still appear unable or unwilling to return to work.
Stories abound about employers bending over backward to poach talent from rivals or lure workers off the sidelines. Many of the perks they’re dangling (kindlier management, free food) are hard to assess quantitatively, but we do have data on pay. Nominal wages have risen across the board, and especially for workers at the bottom of the income distribution, according to the Federal Reserve Bank of Atlanta.
As is usually true, workers who recently switched jobs have enjoyed larger wage increases over the past year than those who stayed in their existing position. The share of job postings that advertise one-time signing bonuses and other hiring incentives has also doubled since last July, according to Indeed.
Both factors create strong motivation for the already-employed to see what else might be out there.
There have been lots of stories suggesting a mass exodus from retail and restaurants. We don’t yet know, though, what share of job-switchers are sticking to basically the same kind of work (e.g., leaving McDonald’s for a similar but better-paying job at Burger King); or are making more drastic career changes (e.g., leaving McDonald’s to take a gig in construction).
One hint that there’s a more radical reshuffling afoot is the high share of workers who say they want a more drastic change. Prudential’s recent Pulse of the American Worker Survey, for instance, found that half of workers say the pandemic has made them rethink the kind of job they want going forward. The same share say they’d retrain for a career in a different field if they had the opportunity.
Earlier this year, I fretted that workers weren’t taking the steps necessary to retrain, based on plummeting enrollment in postsecondary schooling and training programs. Those enrollment numbers are still in free fall. But, happily: Employers desperate to hire appear more willing to provide required training in-house.
From May 2019 to May 2021, the share of job listings that said “no experience required” rose about two-thirds (from 10 percent to 16 percent), according to the data analytics firm Emsi Burning Glass. Likewise, in occupations where employers have had particular trouble finding talent — such as cable installers or medical coders — job ads have become more likely to specify that training will be provided.
|Share of each occupation's job postings that mention training will be provided|
|Occupation||2019||2020||2021||% change, 2019 to 2020|
|Utility Line Locator / Technician||0.66%||4.77%||14.78%||2147%|
|Solar Sales Representative||1.51%||2.98%||7.57%||402%|
|Cable Technician / Installer||7.75%||6.04%||15.24%||97%|
|Pest Control Technician||6.84%||6.24%||9.16%||34%|
|Source: Emsi Burning Glass|
In other words: While workers can afford to be picky, employers cannot.
Employers are “tapping talent pools they may not have been willing to consider before,” says Matt Sigelman, the CEO of Emsi Burning Glass. This is also evident from sharp declines in the share of ads requiring background checks for positions such as tellers, pharmacy technicians and computer programmers.
Even people who’ve been previously incarcerated — a population that historically has sky-high unemployment rates — are in demand. New York state’s Department of Corrections and Community Supervision has experienced an increase in the number of employers upstate contacting its reentry services offices for help in identifying qualified job candidates, a spokesperson for the department said.
The exact concoction of forces that has led to more bargaining power for workers, particularly the most marginalized ones, is likely to be temporary. But the new opportunities and second chances being granted to today’s job-seekers will reshape these workers’ careers — and the overall economy — for years to come.