As Omicron surge began, Americans quit their jobs at near-record rates

The so-called "Great Resignation" is turning into a sticky situation for the American economy, with new data showing that workers continued to quit at near-record rates into the end of 2021. Just as the Omicron variant began spreading across the nation in December, workers continued to switch jobs or take time off from work — leaving employers scrambling to hire.

About 4.3 million people handed in their resignations in December, the Department of Labor said Tuesday. That's down slightly from November, when an all-time monthly high of 4.5 million Americans quit their jobs. 

Layoffs hit a historic low in December as employers held on to their current workforce amid struggles to hire new employees. 

Employers hoping for relief aren't likely to see it anytime soon, according to senior economists Ron Hetrick and Rucha Vankudre at Emsi Burning Glass. Competition for low-wage workers in industries such as restaurants and child care is particularly fierce, but there aren't enough applicants to fill the open jobs in those fields. 

"The 'Great Resignation' is certainly not slowing down," said Luke Pardue, an economist at payroll services company Gusto. 

Although layoffs are at a record low, many businesses coped with the recent surge in COVID cases by cutting hours for workers as Omicron spread across the nation, Gusto's data indicates. That suggests that bosses are predicting business will rebound after the Omicron wave recedes — and are worried that they may struggle to rehire workers if they cut jobs now. 

Employers "are now seeing there is light at the end of the tunnel, and there will be a reason to expand," Pardue said. But "It's incredibly hard to add staff right now in this incredibly tight labor market," he added.

From November through January, about a third of workers saw their hours reduced by 10%, Gusto found. That's double the rate recorded a year earlier.

Restaurant jobs

At the same time, millions of workers remain out of the workforce, including older Americans who stepped back from the world of work, as well as parents who continue to struggle with childcare. Demographic changes are also impacting the labor market, such as a reduction in immigration during the pandemic. That's hitting some employers harder than others.

"When you talk about quits and where they are, a lot of this 'Great Resignation' is occurring in these low-paying jobs," Emsi Burning Glass' Hetrick said. "One of the biggest drivers of job openings are restaurants."

But, he added, "We keep watching our labor force participation rate not recovering month after month."

About 823,000 people quit their jobs in the accommodation and food service sector in December, the Tuesday report said. That means about 6.1% of workers in hotels, restaurants and bars quit during that single month, the highest rate of any industry tracked by the report. 

"Not nearly enough people"

At the same time, that sector had more than 1.5 million job openings during the month, or the third-highest number of "help wanted" ads after professional and businesses services and health care and social services, which were each seeking about 1.9 million workers.

Overall in the labor economy, Vankudre said, "There are about 58 people for every 100 job openings. It's not nearly enough people to take care of all those jobs."

The nation's workforce hasn't rebounded to its pre-pandemic size, despite robust economic growth and higher wages offered by employers eager to fill open jobs. But many workers simply aren't able to return to work due to COVID-19 infections — with a record 9 million people out sick from the illness in early January — while others are switching careers or starting their own businesses. 

Higher wages are also luring workers into switching jobs, economists noted. Industries hired new workers at higher rates than the quits rate in every industry — a signal that workers who quit in December departed for other jobs, tweeted Elise Gould, an economist at the left-leaning think tank Economic Policy Institute.  

Meanwhile, layoffs are at their lowest since the Labor Department began tracking the data in 2000. Businesses laid off 1.2 million workers in December, a series low, according to the report.

"No one is getting rid of the employees they have," Vankudre said.