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2 factors likely drove record number of workers quitting jobs in August, expert reveals

Economics professor: 'We're not used to is workers having this much negotiating power'
Job seeker generic
Posted at 6:19 PM, Oct 13, 2021
and last updated 2021-10-13 18:26:29-04

RICHMOND, Va. -- Dozens of potential employers and employees mingled at a job fair in South Richmond Wednesday as job seekers seeking to rejoin the workforce or, in some cases, who are still employed but want to switch careers.

Whatever it may be, those holding the resumes seem to have the upper hand as there are more than 10 million job openings across the U.S.

"What we're not used to is workers having this much negotiating power in the workplace," Bob McNab, a professor of economics at Old Dominion University, said.

The U.S. reported Tuesday that a record number of Americans, 4.3 million, quit their jobs in August.

Bob McNab
Bob McNab, a professor of economics at Old Dominion University, said.

McNab said two factors likely drove this. The first, COVID fears, which may be why industries that interact with the public saw higher quit rates.

"Turnover of over 6% of all those working in the leisure and hospitality industry," McNab said. "That's just extraordinary."

Workers also have not idea who is vaccinated — or unvaccinated — and what that means for their risk, McNab explained.

The second is that with over 10 million job openings, employers are competing for workers.

"Because they know that they could take those skills and get job offers elsewhere at a higher wage," McNab said.

Bookbinder's Seafood & Steakhouse owner John Taxin
Bookbinder's Seafood & Steakhouse owner John Taxin

It's something John Taxin, who owns Bookbinder's Seafood & Steakhouse, said he has seen in his industry.

"[We] pride ourselves on our starting salary in the kitchen, you know, being higher than other places, people have caught up," Taxin said.

Taxin added that he has also given bonuses and said that while his restaurant has been fortunate to have enough staffing for the most part, a few months ago he used recruiters to find people for the kitchen.

"We had people in the kitchen, who've left for other jobs, where it's, you know, steadier hours or day hours," Taxin said.

Taxin said now is the time for people to switch industries if they want because bosses will be glad to bring you on.

Bookbinder's Seafood & Steakhouse
Bookbinder's Seafood & Steakhouse

McNab said that that if employers don not adapt to this new dynamic, they will continue to struggle to hire workers. But even then, they could be faced with workers getting pulled elsewhere by even more attractive offers.

The issue will likely last into next year, according to McNab.

"Employers are going to have to respond by increasing wages, which in turn increases prices, which in turn will spark more inflation," he said.