Economists say rapid quitting and hiring will continue in 2022 despite omicron wave
Turnover reached a new high as 4.5 million workers quit their jobs in November, according to the Labor Department's latest Job Openings and Labor Turnover report. That comes out to 3% of the workforce, matching the record-breaking share of workers who quit in September.
Quits increased the most in several lower-wage sectors, including accommodation and food services; health care and social assistance; and transportation, warehousing and utilities.
November generally sees a bump in quits as people prepare to take new jobs in January, but this year's record-breaking numbers reflect a "magnitude we've never seen before," says Rucha Vankudre, a senior economist at Emsi Burning Glass, a labor market analytics firm.
Meanwhile, the winter resurgence of Covid-19 cases driven by the omicron variant could disrupt business plans to staff up, and employees could continue to have the upper-hand in the tight job market well into 2022.
"Employers are having to do a lot to get employees into their doors," Vankudre tells CNBC Make It. In the new year, "there's no indication that will change."
Omicron may not change quitting patterns
The latest JOLTS data is a snapshot of the job market on the last business day of November, meaning numbers pre-date the omicron variant's spread in the U.S. and the current Covid surge across the country.
The current surge has already led to thousands of flight cancellations during the holiday season, due to staffing shortages following Covid-19 infections as well as severe weather. Some businesses and schools have temporarily closed due to rising cases among teachers and staff.
But job openings and hires remain historically high, Vankudre says. Hiring outpaced quitting with 6.7 million people taking new jobs in November, indicating people are leveraging the tight job market to quit and take new jobs with higher pay and better working conditions.
It's possible workers who are concerned about the health risks of the virus, or who have to deal with care-giving challenges, are taking new jobs that can be done remotely or on a flexible schedule, rather than having to drop out of the workforce entirely.
Notably, the U.S. economy saw record turnover throughout the second half of 2021 in what's become known as the Great Resignation, even as the highly contagious delta variant spread throughout the country.
High turnover expected to continue in 2022
Economists expect the war for talent will continue in 2022 as employers try to stymie turnover and attract new workers. Larger companies who have the resources to offer more pay, better benefits, flexible work and job stability are winning out, Vankudre says.
A recent report from The Conference Board and Emsi Burning Glass found the share of job postings mentioning a hiring bonus more than doubled between March 2020 and October 2021.
Employers may also need to lower their requirements to hire new workers and offer training to get them up to speed, as the pandemic has accelerated changes to technology and the way work gets done, experts say.
'Not enough workers to go around'
The labor market recorded 10.6 million new job openings in November, according to the JOLTS report, down slightly from October but still "very high," says Vankudre. Job openings increased in finance and insurance, and in federal government, but decreased across accommodation and food services, construction, and nondurable goods manufacturing.
There are roughly 65 unemployed workers for every 100 job openings, even tighter than the roughly 82 unemployed workers per 100 job openings in February 2020 before the pandemic.
Simply put, "there aren't enough workers to go around for the jobs we have right now," Vankudre says.
Today's labor shortages are only a glimpse into longer-term employment trends that businesses must prepare for, says Emsi Burning Glass senior economist Ron Hetrick. "With the surge in Baby Boomer retirement, declines in labor force participation amongst millennials, ebbing birth rates and falling immigration numbers, don't expect the labor shortage to be completely solved in the new year," he said in a statement.
On Friday, The Labor Department will release the number of new jobs created in December, which will show the broader impacts of the latest Covid wave due to the omicron variant.
Check out:
How the omicron variant could impact return-to-office plans
Why the 'stay interview' is the next big trend of the Great Resignation
This founder says quitting her corporate job didn't solve her burnout–here's why
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