Munich Personal RePEc Archive

The Great Resignation, Unemployment, and Underemployment in the US: A Study of Labor Market Segmentation

Lambert, Thomas (2022): The Great Resignation, Unemployment, and Underemployment in the US: A Study of Labor Market Segmentation.

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During 2021 and 2022 many news media outlets have been reporting that millions of workers in the US have been quitting their jobs in record numbers. In a global economy rebounding from the economic downturn caused by the Covid-19 outbreak and demanding more workers, a high rate of resignations has exacerbated labor shortages and may be aggravating underemployment rates if many workers are choosing not to be part of the labor force or only to work part time. Many reasons have been offered to explain this “Great Resignation” including high day care costs for working parents which may in turn be causing the trend of lower female labor force participation; the liberating experience of not working at all or to work from home instead of having to work from one’s usual work place during the Covid-19 quarantine/lockdown periods; stagnant/low wages and greater job tenure uncertainty which make working less attractive and more stressful; and the feeling by many of not wanting to work further for bad bosses or management who create bad work environments so that resignation becomes a means of escape from such conditions. This paper does data analysis on US labor trends since 2003 and during and after the Great Recession of 2008-2009 and demonstrates that resignations have been trending upward in the US aggregate economy and that quit rates mostly have been trending higher within many US industries. These phenomena can best be explained by the concept of labor market segmentation, high unemployment and underemployment rates that exist even in good economic times among certain industries, minority group composition, wage stagnation, and type of managerial supervision. Some of these same factors help to explain labor under-utilization greater than national/aggregate rates within these industries as well.

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