The Great Resignation Is an Exercise in Frustration and Futility
For the past year, upwards of 4 million Americans each month have been quitting their jobs and looking for new ones. Of course, I've been wondering what's behind The Great Resignation and the nationwide search for better jobs that has followed it.
One theory, close to my heart, is that in the stretch between the Great Recession (beginning in 2008) and the pandemic disruptions in the work force that came after eventual financial recovery (around 2017)—that these impacts on our jobs and the soul-searching that came with them have propelled growing tides of workers to seek more intangible rewards from their work: A greater sense of purpose in terms of realizing personal priorities perhaps. A belief that I’m actually contributing to innovation in some corner of the marketplace, or providing access to a product or service that’s been inaccessible before. Or maybe it’ feeling better about myself given the mastery that I’m gaining on the job. Wanting to improve “how good I feel when I’m working” could lead me to quit a purposeless or confining job for one that might build pride in my sense of accomplishment.
But I’d like to propose another motivation for The Great Resignation and the unprecedented job search that's still ongoing.
What millions of American workers want most may be a greater bottom-line impact from jobs they’ve been doing for as long as they can remember, along with the feeling that they're actually "getting ahead. They want bigger paychecks, more heath-, retirement- and profit-sharing benefits so that they can finally gain their promised slice of the American Dream and overcome the pervasive sense of economic insecurity that they’re still feeling in spite of holding full-time jobs. “Just compensate me enough to live a better life that’s free from financial anxiety” is how they might describe their motivation for the job hoping that’s been rampant over the past year.
Moreover, an argument can be made that “the forces that shape the American economy” have conspired to consign nearly everyone in the workforce (below the top professional and investor class) to a surprisingly narrow band of compensation and job rewards. To say this another way: at least 3/5ths of the American workforce (and probably more) are effectively taking home roughly the same paycheck and, therefore, have been churning (pointlessly?) through jobs with similar economic rewards in the vain hope that they’ll find The One that will finally pay them enough to counter their financial anxieties.
Over the last 50 years, an argument can be made:
- that “the forces behind the American economy” have figured out how little they have to pay the nation’s workforce to yield sufficient productivity in the economy at large and enough profit to satisfy the owners and professional class at the top of it;
- that the lower 3 or 4/5ths of the American workforce that is paid within this narrow band of compensation has finally gotten wise (through the economic upheavals of the past decade) to the clamps that have been effectively been placed on their economic upside; and, as a partial result,
- that in the Great Resignation, millions of American workers have been furtively changing jobs in the vain hope that they can escape their financial fears by finding work that will give them a higher standard of living at the end of the day.
Unfortunately, given the way that the job-market forces have been engineered by policy makers, it is entirely possible that there is no way out—that all this moving to-and-fro between different jobs in the bottom 4/5ths of the economy is a fool’s errand—because the economy itself is no longer oriented towards greater economic opportunity and financial security for the vast majority of Americans who are toiling within it.
Where once it was possible for highly motivated Americans to move “from rags to riches” in the course of their careers, this kind of financial mobility may be out of reach today for nearly all but the top fifth of today’s workforce (the most educated, the most highly skilled, and the ones who already have the wealth to leverage on the path to even greater riches). As a result, much of “the discontent” in our daily lives (and therefore in our politics) may come from the tacit awareness that in America today most of us cannot improve our “economic lot in life” however much we job hop. Instead, more of us may be reaching the conclusion that we’ll continue to be saddled with financial insecurity however hard we work or much we are willing to sacrifice.
If we've in fact established a kind of “disgruntled serfdom” for the benefit of the fortunate few “up there, in the castle,” it would surely be a recipe for even greater political discord in the years to come.
A recipe that may not work quite as well any more.
I’m tossing about some broad generalities here for the sake of argument, but bear with me.
Does everyone in America’s middle and lower classes who's working today feel economic insecurity? No, probably not. Moreover, there are wrinkles in my argument given varying family sizes, how many people are working within those families, and cost-of-living variations in different parts of the country. But what if these outliers or demographic differences matter less than the more general truth? What if most American workers still feel a gnawing sense of financial insecurity in their jobs, wherever and however they’re doing them? What if the job market is structured to keep most American worker bees (and maybe some of you too) always strivingfor greater financial security but never really intending to deliver that kind of comfort and peace of mind?
If the economic aspirations of most Americans are truly being stifled today, what will the consequences of this growing discontent be in coming years, particularly since access to upward mobility was one of the hallmarks of America’s prosperity story from the early 1800s until the 1970s? All we need is our living memories to recall the post-World War II years when many more Americans (not all, but many more) were able to get ahead than can do so today. What if better jobs aren’t “out there” for most people given the economic policies that are stacked against them? Is The Great Resignation and job search merely the early flailings of what could become a revolt of the working masses?
The pervasiveness today of what’s been called “quiet quitting” puts more grist in this mill.
“Quiet quitting” is effectively “quitting your job” while still sitting at your desk. It’s individual workers deciding that: “you’re not paying me enough to go the extra distance that you keep talking about. So I’m going to do the bare minimum that I think is fair given what (little) you’re paying me.”
Not only is the quiet quitter disgruntled, but it should come as no surprise that s/he is also aggravating everyone who’s working along side of them according to some commentary this week. “[Q]uiet quitting is corrosive to workplace culture—and the bottom line—because it’s demoralizing to efficient workers to see others phoning it in without penalty.” In circumstances like this, the quiet quitter’s protest gets everyone else at the workplace wondering whether they’re being a chump for the same miserable paycheck.
Once again, it’s worth wondering whether quiet but pervasive rebellions over inadequate compensation, and the underlying sense of hopelessness about ever improving one’s standard of living, have more to do with our social and political divides—and therefore the long-term health and unity of our country—than we seem to be acknowledging.
The Occupy Wall Street protests a decade ago also marked the rising discontent of workers who saw, and rebelled against, the disproportionate economic returns that were being realized by those at the top of the economy and effectively off-limits to them.
A short essay this week in the Wall Street Journal put some compelling data behind the argument that upward economic mobility has become increasingly difficult, if not impossible, for most American workers to attain--or to feel that they're attaining. Strikingly, the essay is called “Income Equality, Not Inequality, Is The Problem,” with the authors (one a former chair of the Senate Banking Committee and the other a former commissioner in the Bureau of Labor Statistics) stating their conclusion in the essay’s first line:
“Contrary to conventional wisdom, the most dramatic and consequential change in the distribution of income in America in the past half-century isn’t rising income inequality but the extraordinary growth in income equality among the bottom 60% of household earners.”
They attribute this income compression to government policies over the past 50 years. Considering tax relief and social safety net (or transfer payments) to those in the poorest fifth of the breakdown, the actual differences between household income in the lower and middle working classes is negligible. Their point is to show how government tax and social policies have fueled middle class resentments against poor Americans who aren’t working as hard as they are. On the other hand, my take-away from their data is that government tinkering with the economy to achieve "greater fairness" across households has effectively stifled both the middle and lower classes, whatever their ethnic differences.
60% of working Americans in the lowest three quintiles of the economy can’t escape their current economic condition whether they change jobs or not. Everyone from the middle to the lowest part of the economy is effectively being held down by government policies that are as disincentivizing as they are divisive.
Here’s a chart that summarizes the author's conclusions.
Looked at from three different perspectives, this chart illustrates the striking similarity in income for the bottom 3/5ths of American households. (Additional assumptions and methodologies are discussed in the essay.)
Here is their presentation of the most relevant numbers. Once again, we’re talking about the bottom three-fifth segments (or quintiles) of the American economy in terms of household income. Their first set of comparisons emphasize the disparities in the number of people who are working in each household as well as the compression in the actual earnings across the three groups:
“In 2017, among working-age households, the bottom 20% earned only $6,941 on average, and only 36% were employed. But after transfer payments and taxes, those households had an average income of $48,806.
“The average working-age household in the second quintile earned $31,811 and 85% of them were employed. But after transfers and taxes, they had income of $50,492, a mere 3.5% more than the bottom quintile.
“The middle quintile earned $66,453 and 92% were employed. But after taxes and transfers, they kept only $61,350—just 26% more than the bottom quintile.
After noting that “even these figures don’t tell the whole story,” their second comparison between the household income groups makes an additional adjustment for the number of people who are actually living in each working household and being supported by a wage earner:
“In the bottom quintile, there are on average only 1.92 people living in a household. The second and middle quintiles have 2.41 and 2.62 people respectively. After adjusting income for the number of people living in the household, the bottom-quintile household received $33,653 per capita.
“The second and middle quintile households had on average $29,497 and $32,574 per capita, respectively.
“The blockbuster finding is that on a per capita basis the average bottom quintile household received 14% more income than the average second-quintile household and 3.3% more than the average middle-income household.”
These numbers help to explain why many working middle-class white, Black and Hispanic voters have been moving away from the Democratic Party (and its tax and transfer policies), and the growing level of resentment against the poorest Americans who don’t have nearly the same rate of labor force participation as they do.
My take away, once again, is that America’s working middle classes don’t have measurably more “to show for” their hard work than the poorest Americans at the end of the day, and that simply chasing “better jobs” without a deeper rethinking of economic policies is unlikely to improve their perception.
Americans caught in the middle class may feel resentment about those poorest, “government favored” families, but they may be growing even angrier about an economy that disincentivizes everyone in the middle and lower income classes from attaining upward economic mobility. And while the essay’s authors don’t consider it here, my suspicion is that every working American below the top tier of professionals and owners (that is, those in the fourth highest quintile as well) feel similarly disincentivized and angered by the way that our economy works (or doesn’t work) for them today.
If you feel stuck in the lower, middle or upper middle classes and unable to improve your lot, for the first extended period in our post-Revolutionary history—you probably are stuck.
I want to leave you today with a brief return to a book that I discussed here on this same page a few years back. Called “Mass Flourishing,” it was written in 2013 by Nobel- Prize-winning economist and Columbia University professor Edmund Phelps, who just turned 89 a couple of weeks ago. Instead of the flourishing American worker, he saw in the course of his researech someone far more like the jury-rigged sculpture pictured above when he looked around him.
From a century-and-a-half distillation of economic activity in America—the early 1800’s through the middle of the 20th Century—Phelps concluded that an unprecedented degree of human flourishing was produced by a legion of American entrepreneurs who not only created increasingly better lives for themselves but also growing prosperity for almost everyone around them. As the U.S. broke impediments to participation in this economy in succeeding years—for immigrants, for women and, towards the end of this period, for minority groups—there was a widely distributed cascade of economic benefits from these bold, hard-working and fearlessly innovative entrepreneurs. Thinking for yourself, working for yourself, competing with others, overcoming obstacles, experimenting in the marketplace and making your mark—these were the “virtues” that made Americans’ standard of living among the highest in history. Sadly to Phelps, well-meaning government tax policies, regulations and safety nets have sapped that economic lifeforce, beginning in the 1970s and continuing through today.
Individuallly-oriented social values like self-reliance and “the gumption to stand apart from community, family and friends” in order to make something of yourself have gradually been replaced (or over-ridden) by our current preference for “solidarity, social protection and security.” As I noted at the time:
“Instead of driving an economy that championed a good life from the ground up for individual workers, American policymakers began to manage the economy from the top down so that it would be what they conceived of as good for everyone. For Phelps, the [personal] satisfaction that came from realizing yourself through your talents at work, along with the explosion of productivity that accompanied it in the economy...was increasingly constrained by the parallel pursuit of other, well-meaning priorities. We tried to do two [incompatible] things at once, with a number of unintended consequences….
“[Because] when the values of the corporate state overtake the values of an [entrepreneurial one], the result is slower wage growth, reduced productivity in the economy, greater inequality among the nation’s stakeholders [including, a growing divide between the richest 1/5th and everyone else], less inclusiveness in promises like ‘the American Dream,’ a sharp reduction in individual job satisfaction, and workers who have lots of stuff [to buy] at the end of the day but little sense of personal meaning in their lives [when they can no longer provide that meaning for themselves through transformational accomplishments].”
The WSJ essay and accompanying data I quoted from above show this constraining compression in the workforce as well as how much individual workers find themselves either stifled at every turn (or feeling that they're being stiffled at every turn) when it comes to realizing their economic aspirations today.
America has almost killed its golden (economic) goose, and the economy’s overall lack of vitality is infecting everything that it touches, including our political cohesion.
We need much sounder leadership than we have today at every level of government, but in addition to that—and if it’s possible, even more than that—we need men and women who are capable of realigning the incentives and disincentives that govern our working lives.
As Labor Day overtakes us, maybe we can include a small prayer for policy makers who are more in the mold of Professor Phelps so they can help us to unlock our sleeping potential as a workforce and a nation.
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Have a good week. I’ll see you again next Sunday.
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