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Great Resignation: An analyst, an economist, and a personal finance expert discuss labor trends

Jain Family Institute Senior Fellow Claudia Sahm, ZipRecruiter Chief Economist Julia Pollak, and Yahoo Finance contributor Mandi Woodruff-Santos provide insights on what to expect on the job market post-pandemic during Yahoo Finance’s Time For Change.

Video Transcript

[MUSIC PLAYING]

MARQUISE FRANCIS: Welcome to "A Time for Change." I'm Marquise Francis. Americans are quitting jobs in record numbers. It's what everyone seems to be talking about right now. But exactly who is doing the quitting, and where are they actually moving along to?

Here to dissect what many are calling the great resignation is Claudia Sahm, Senior Fellow at the Jane Family Institute and a former economist at the Federal Reserve and White House. Claudia, thank you for joining us this afternoon.

CLAUDIA SAHM: Great. Thank you for having me.

MARQUISE FRANCIS: Great. So a number of Americans are quitting their job in record numbers, to the tune of 4.4 million in the month of September alone. These people are basically saying, thank you, job, but no, I'm good. Can you break it down for us by age, race, and gender-- what are you seeing?

CLAUDIA SAHM: Well, first, just stepping back, the quit rate-- so the people who are able to go in and say, I'm out of here, I'm going to a new job-- that is one of many signs of a labor market that is still coming out of this pandemic. In addition to these really high quit rates, which are a good sign-- that is often people moving up a career ladder, getting higher pay-- we also have nearly five million fewer workers on the job than we did before the pandemic.

We've seen real wages, inflation-adjusted, increase. So we have this mixture of good, and bad, and unprecedented. With a lot of these statistics, you can go further back. To your question about that, how do we think about that big headline number of the rate of quits?

It is absolutely important now and always to recognize that we have many different labor markets in the United States. We don't all apply for the same kind of jobs. And one area where it is clear now and always is when you look at workers by their racial backgrounds, their ethnic backgrounds, we see big differences in the recovery. We see big differences in the opportunities that they have.

And so one good sign of the quits-- and what often gets referred to as a hot labor market, we also have a lot of employers that are struggling to bring workers back-- that's an opportunity for people who would often be left on the sidelines, who wouldn't have the quote unquote qualifications that they're looking for, employers are going to give them a shot because they need to fill those jobs.

So we have this moment where we're seeing what can happen-- low wage workers can get a raise. Like, this is not impossible, though it hasn't happened for a long time. But all of this is incredibly messy, and it's hard for us to step back and be like, OK, what does this mean?

What does this mean about right now? What does it mean about the next six months, the next year? So I'm very wary of picking out the latest statistic and the big number on the top, because we really, really have to look under the hood, understand different people's experiences, and we have to look across a wide range of measures that we have about what's happening on the job in people's employment lives.

MARQUISE FRANCIS: Yeah. I appreciate that distinction. Because when I'm thinking, when I'm reading some of these reports and these headlines of the great resignation, and actually talking to friends or colleagues of mine, it's really two different things, right? And so a lot of people are wondering, are people actually quitting and getting better jobs? Or are they saying, no, to the workforce altogether?

And I think what you're getting at is it depends who you're talking to. It depends on socioeconomic background. So is that what you're kind of getting at?

CLAUDIA SAHM: Right. Again, there's all these different "labor markets," quote unquote. I've been very critical of the great resignation story in the sense of the pandemic has had people step back, and rethink their lives, and now they're going to work less, or pursue some other passion. The reality is the quote unquote "rethinking our lives" is a privilege and something that professional workers, higher income workers are able to do.

And that is, frankly, not a choice that most American workers can have. So I think what's happening, like I said, and this is a good sign, is people are getting better job offers. Maybe they're moving sectors-- that they used to work in a fast food restaurant, and now they're working at a warehouse. So you see this massive amount of people switching jobs, which can be good. It can also be a bad sign, like, they were in a really bad job before, or there's something just disruptive in the economy.

And then the other place that the great resignation-- so I don't think it's people rethinking their lives in terms of, like, I'm just going to, like, go hang out or do something wonderful, peaceful with my time. I think a lot of it is people getting better jobs, right, and moving around-- and that's good.

The other piece of the great resignation that I've been very skeptical of is we have seen many workers retire-- retire at a rate faster than we would have expected without the pandemic. And there's been a lot of, well, they're not coming back, right? So we can't run this economy too hot, because employers just aren't going to find these workers because they're retired.

The reality is that retirement is often a very socially acceptable-- personally easier to deal with form of unemployment. You might still be putting jobs out, but if somebody asks you, even in a survey, say, I'm retired. And we have-- because, frankly, it's more dangerous if you are an older individual to be working. COVID is still here.

What we have seen very recently is some signs that workers, particularly the older workers, who we might think are most potentially affected by COVID, they're starting to come back. I wouldn't expect everyone who's retired to come back. Frankly, a lot of them deserve and probably have some nest egg built up to retire.

But we have to be really, really careful about interpreting big life changes from an event, this pandemic, that will pass. And it's not clear-- this is not the kind of thing that can rewrite our path, right? It is disruptive, but we can't assume that.

MARQUISE FRANCIS: No, I appreciate that. And I want I want to jump in here really quickly, because you talk about those positives-- the higher wages, the bargaining power that we're seeing in this moment. But I'm curious, what happens when the surge in the demand subsides?

You know, are we entering a new labor industry, right? I know that 30 to 45-year-olds are the big ones driving a lot of this resignation, but also tech and health care are some of the leading industries where we're seeing a lot of this turnover. So is this kind of a new age that we're seeing?

CLAUDIA SAHM: Well, those positive things that we're seeing in the labor market, people being able to move up the career path, lower wage workers finally getting those raises, I would like to see those staying. I am extremely skeptical that we will see the same staying power.

Like, some people are going to keep those better jobs, those raises in some cases will stick-- but to have long run, transformational change that reverses or even starts to reverse decades of decline in worker power, decline in career paths, that is going to take transformational legislation, changes in worker-- changes, particularly, in employer behavior-- like, who they hire, how they train them.

And as much as I want that to continue, I am-- we can't bank on that. That is not-- that's not a given. What I think the economy today has shown us, it's shown us what's possible. Like, we can have a better labor market. We can pay people living wages, but we can't count on that happening without more legislation such as the I like to call it the kids care and climate legislation, or the Build Back Better, that's in Congress right now. We need to do something that really fundamentally, over the long-term, changes workers' lives and opportunities.

MARQUISE FRANCIS: Absolutely. Somehow, some way, it seems to always go back to legislation. Claudia Sahm from the Jain Family Institute Senior Fellow, thank you for joining us today. And coming up, where are the workers going after they quit? We'll talk to the chief economist at ZipRecruiter right after this.

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[MUSIC PLAYING]

MARQUISE FRANCIS: Welcome back to "A Time for Change." Call it the great resignation, the great reshuffle-- there's no question there's a lot in flux in the job market right now-- people switching jobs, folks looking for jobs. I'm sure pretty much everyone's inboxes on LinkedIn is overflowing.

That means a lot of activity on other job sites like ZipRecruiter. Let's bring in Yahoo Finance's Anjalee Khemlani who talked to ZipRecruiter's chief economist about what you're exactly seeing.

ANJALEE KHEMLANI: That's right, Marquise, a lot going on as you mentioned. So what is happening? Where are we seeing these jobs pop up? And also, what is going to be the impact once we get out of this pandemic? That's what Julia Pollak, Chief Economist at ZipRecruiter, and I discussed. Listen.

JULIA POLLAK: So I think this is such an interesting pandemic, because there are winners and losers. And at the same time, some of the losers are actually doing well in other areas. So let me give you an example of what I mean.

At the start of the pandemic, 80% of the job losses were among the lowest quarter of wage earners. So people at the bottom of the income distribution really took the hardest knock. But because of the huge fiscal response, and because of the rapid recovery, and the tight labor market that ensued, wage growth is actually fastest now for workers at the bottom, and some groups of workers that typically really struggle, like teenagers-- especially Black male teenagers-- actually have lower unemployment rates now than they have historically, typically. So you know, very puzzling, unusual situation.

ANJALEE KHEMLANI: That is unusual. And what about the skill level? Have we seen a shift in sort of how many people are, say, applying for jobs with certain skill levels? Because I know we've seen the reports of how restaurants, for example, can't seem to hire quick enough and are now relying on teens.

JULIA POLLAK: So you have this labor market where it was those relatively-- jobs that required little education that fell the fastest. But now, given this labor shortage, employers are reducing education, and training, and experience requirements in job postings quite substantially. So we've seen the share of job postings that require a college degree kind of almost fall in half.

They're half of what they were about five years ago right now, the share of job postings that require five or 10 years of experience. That's also fallen in half, at the same time, the share of job postings offering all kinds of amazing hiring incentives or saying, entry level, no prior experience needed-- those have just skyrocketed.

So employers are really casting a wider net than they would ordinarily. And that means that there's a huge opportunity here for workers who might have been passed over in the past and might not have qualified for certain jobs that they now have access to.

ANJALEE KHEMLANI: Correct me if I'm wrong, I'm sort of just maybe drawing the wrong conclusion here-- but if education is being impacted and you're going to see that impact in a few years, but employers are casting a wider net, does that balance out? Do we see a future where maybe the emphasis isn't necessarily placed on education? And younger entrants to the workforce might just be asking for different things for their employers?

JULIA POLLAK: Right. So I think this missing school year that so many had that saw college enrollments fall, especially minority enrollments in community college fall, by double-digits in some cases, the only way we're going to be able to make up for that gap is if employers step in to some degree. And we are seeing that happening.

So Walmart will pay for your college degree. Macy's just announced recently that it will pay for your college degree. There are about 8% of job postings now that offer tuition assistance or educational assistance, up from around 2% before the pandemic. So yes, employers are increasingly stepping into this role and helping workers, even who are in jobs that don't really offer much career growth, get that career growth through the job through funding education.

ANJALEE KHEMLANI: What would be your advice to someone who's contemplating leaving their job right now? What should they be looking for? And what's out there for them?

JULIA POLLAK: So typically, when you look for another job, what happens in a pre-pandemic normal world is that the benefits of switching jobs are typically relatively small. And often, the costs are quite high, because it means you'd need to uproot your family or have a longer commute. Now, because wages are growing so quickly in some industries, and not evenly, with some employers taking the lead and some lagging far behind, you can actually see a huge difference in working conditions and wages emerge between some jobs and other jobs. And so this is a really exciting time where job-switchers are getting a lot more pay than job-stayers, because they are doing their research and finding the places where the economy is hottest and moving to those.

ANJALEE KHEMLANI: What about some individuals who might, anecdotally we've heard, be reaching out, are individuals-- people of color or belong to other minority groups-- and just aren't hearing back from employers? Is there a trend there? Should we be concerned about maybe too much talk and not enough action on that front?

JULIA POLLAK: You know, one of the problems with a situation which huge numbers of minorities, young workers, lose their jobs in service industries is that those are also the workers who typically have the hardest time finding work. We've seen from many studies that the workers who are most affected by discrimination in job postings-- in job applications and callbacks-- are minority women over the age of 55.

And when we dive deeply into looking at where these missing workers are, it really is among older workers that we've seen the largest decline and among women. And that probably has something to do with it. Bias is a very prominent part of the job search process.

Employers are making snap judgments about people based on a piece of paper or a couple of minutes spent with them. Employers are often risk averse, and so we rely on these biases and heuristics. But that means that the people often make the wrong decision or draw the wrong conclusions and rely on stereotypes. And that can be very damaging, especially to older women.

So you know, this is a time where I think some job seekers need to be kind of clear-headed about the fact that they are facing a disadvantage, and need to apply, perhaps, to more jobs than they would ordinarily do. It is a numbers game. There are certainly areas where there are huge labor shortages, and employers are struggling to find candidates.

But there are many other roles, particularly attractive, comfortable, relatively pleasant jobs and remote jobs, where there are 50, 60, 70, 100 applications for posting. In those industries that saw the largest declines in jobs, we have lots of unemployed people. You see lots and lots of applications per job.

So in journalism, for example, which saw lots of closures and consolidations, you know, it's not uncommon to get 150 applications per post-- communications and HR. So job-seekers shouldn't feel too discouraged if they are passed over and don't receive callbacks. You need to understand it's a numbers game, and keep faith, and keep applying.

ANJALEE KHEMLANI: So as you can hear, a lot there-- a lot going into what the thought process is behind the moves, and really what's going to be laying ahead. We'll have to wait and find out. Back to you, Marquise.

MARQUISE FRANCIS: Yeah. Anjalee, I actually want to talk a little bit about that conversation, because I think you and me know journalism is definitely a tough field to get into. And the numbers may be small there, but what fields are actually seeing a lot of job openings?

ANJALEE KHEMLANI: So surprisingly, maybe to the average person, but not surprisingly if you think about what is entailed in this, Julia really outlined a number of things that are mostly labor intensive or require more in-person. So shockingly, education is one of them.

More than 723,000 jobs are missing, basically, or fewer people are there compared to the pre-COVID standards-- and other areas like cafeterias, catering, school bus drivers are part of that education too. It's all these jobs that you think about mirroring what we saw in the restaurant industry kind of following that same trend.

MARQUISE FRANCIS: Yeah. And there's so many narratives out there, right? When I talk to some of my friends, we're seeing all this buzz about the great resignation, but folks actually aren't seeing jobs they want. Or recruiters are hitting them up or not actually circling back. And so what's the gap there in the labor market where it's existing jobs and the jobs people actually want?

ANJALEE KHEMLANI: Well, what Julia actually said was that there are about 55% of the job openings compared to 10% of those available that are remote. So 55% of the labor market looking for a jobs that are remote, only 10% of jobs available that follow that. So it seems to me that, especially as we saw just how many people really were you able to work remote over the last year and a half, almost two now, quite honestly, you know, a lot of people are considering that for their lifestyle, and maybe considering the higher pay that tends to go with it.

But we're not seeing as many jobs available out there. Even if there are well-paying jobs, they're not necessarily remote or they don't allow remote. And so that whole idea of know this buildup to what will the new normal look like, back to the office buildings or not, that definitely seems to be part of the equation.

MARQUISE FRANCIS: Absolutely. I kind of shuddered when you said two years right there. Anjalee Khemlani, thank you so much for joining us. Coming up, looking for a new job or maybe you're just trying to negotiate a better salary-- coming up, we'll talk a little bit about that.

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ALEXIS CHRISTOFOROUS: Welcome back to "A Time for Change," everyone. If you're thinking about looking for a new job, you might want to get ready for those awkward money-related questions that usually come up in interviews, like this one-- what salary range do you have in mind? Got to love that.

Well, how best to handle it? I ask Yahoo Finance contributor Mandi Woodruff-Santos, who's also co-host of the "Brown Ambition" podcast. Here's her advice.

MANDI WOODRUFF-SANTOS: I mean this specifically for, or especially for, women of color, where we are just-- history has shown, research has shown that we are more likely to be underpaid, we're less likely to get opportunities for advancement.

So if we walk into a job interview and we actually tell them the range that we think, you know, we should be making, we're basing that on potentially years of being underpaid. And they may come back to you at the low end of that range, you know, to begin with. So really, you could be setting yourself up to just continue proliferating that trend of earning less than your peers if you give an answer.

I like to turn this question back on the recruiter. And in fact, they, honestly, should be the ones who have a range in mind. I don't know why we're still expecting employees to guess their own value, when, really, it's the recruiters and hiring managers who should be able to look at the bevy of applicants they have, the market rate for skills, and set their own range.

So here's a not so direct way to answer that question that's polite, but still doesn't actually give them a range. Say this-- I'd love to learn more about the role and its scope before discussing compensation. But do you have a particular budget in mind that you would like to share? This puts the ball back in their court.

And yes, then, you're in the position where if they give you a range that's way higher than you would have asked for, you can do an internal happy dance and be super excited-- but play it cool. You know, and if it's way under, then at least then you know, OK, they can't afford me.

ALEXIS CHRISTOFOROUS: All right, good advice there. Always good to be armed with those well-rehearsed ad libs on job interviews. You can check out Mandi's full article about those awkward questions on job interviews and how to handle them on our site, yahoofinance.com. That's going to do it for "A Time for Change" this week. I'm Alexis Christoforous. For Marquise Francis, thanks so much for joining.