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The Great Resignation Is Real

Updated: Jul 20, 2023

Doesn’t it seem like the job market should be on fire?

Last week, the U.S. Bureau of Labor Statistics announced that 4.3 million Americans, or 2.9% of the entire workforce, have quit their jobs in August. That was a record-breaking month, piggybacking on previous record months. So what gives?

The answer is that "The Great Resignation" is real, and it can be seen across virtually all industries.

Employers in August had 10.1 million jobs to fill-- a near record number-- and those far outnumbered the 7.7 million jobless, according to the Department of Labor. Quits increased by about 242,000 in August, lifting the total to that record 4.3 million-- that’s equal to the population of South Dakota, North Dakota, Alaska, Vermont, Wyoming and the District of Columbia combined! There were 157,000 people who quit in the lodging and food services industries alone while 26,000 left in the wholesale trade business and 25,000 bailed on their state and local government education positions.

This is the highest quit rate since 2000, when the U.S. Bureau of Labor Statistics began the current Job Openings and Labor Survey data series; last month was the single highest quit rate ever observed in the JOLTS data.


It's common to see a surge in quitting when the job market is tight and there's a plethora of open positions, yes, but this is unlike anything I've ever seen. Generous government benefits may have encouraged some people to quit, but there’s plenty of evidence that suggests otherwise. Are people angling for a raise after decades of stagnant pay? Sure, or at least, they should be. The family pressures imposed by closed schools, the closing and reopening of businesses, the exodus from metros to rural locations and the fear of the virus in face-to-face settings have all certainly played a role, but doesn’t this historic rise in quitting seem to be about more than all of these things?

It sure does to me. This strikes me as a once-in-a-generation “Take-this-job-and-shove-it” moment. There’s an anger out there, as evidenced by the "R/antiwork" subreddit.

R/antiwork, which is about "work-free" lifestyles, has swelled to more than 700,000 members over the past two years, an increase that trends alongside the record-breaking number of Americans who have quit their jobs since April 2021. People are posting text exchanges between themselves and their employers. …Angry stuff like this:

Maybe that’s a little on the anecdotal side, but the fact is that the quits rate is the share of workers who voluntarily separated from their positions, and it’s generally seen as a sign of economic confidence. Normally, you might think it’s positive to see it soar to new heights like it did in August. However, there are plenty of metrics that jive with this visceral hatred we’re seeing from workers for their employers on R/antiwork.

Unemployment in September was still at elevated levels (4.8%) compared to before the outbreak, and there are still five million people who had jobs before the pandemic who are still missing from the economy. That’s after the pandemic decimated the job market, slashing 22.3 million positions and causing joblessness to skyrocket to 14.8%, its highest level since the Great Depression.

The labor pool continues to shrink, with 3.1 million fewer people working today than in February 2020. Labor force participation in September declined by another 183,000 workers.

But what I see as a primary factor is that individuals are simply reevaluating what they want out of work. We see it on Reddit, and there are numbers to back it up. A Bankrate poll from August found that the majority of Americans (55%) who are either employed or looking for a job — what economists would describe as being in the workforce — say they are likely to look for new employment in the next 12 months. Even more surprising, some 28 percent of working Americans who currently say they’re not looking for a new job are still expecting to search for a different position at some point in the next year. In other words, even people who have a job are not happy with it. ___________________________________________________________________________________________

The S&P 500 was up 29% in 2019, and then the pandemic hit and the market was up another 16% and then, with the pandemic continuing, the market is up another 21% year to date in 2021. So, either you think pandemic times are three times better for the stock market than normal times, or you have to conclude that something else is going on.

That “something else,” of course, has been government stimulus, and we expect the massive amounts of stimulus we’ve been getting for years to abate starting on November 3rd at the Fed’s next meeting. That will provide headwinds for growth stocks of all kinds. Whether it’s a biotech company or an electric vehicle company or a solar company, the reality is that earnings ten years from now are worth far less when you discount them for higher interest rates. That’s just how it works.

Therefore, we continue to expect tough sailing for tech stocks with high valuations and little to no current earnings. On the other hand, in our view, the demise of mega-cap tech stocks has been overly prognosticated, for their balance sheets remain the strongest in the entire economy.


In the current environment, with what we expect to be a prolonged labor shortage and higher interest rates, we continue to favor value over growth. It’s not unreasonable to expect the economy to run in fits and spurts throughout 2022, so we also recommend maintaining elevated cash positions for buying dips.

We don’t expect this coming year to be easy, so let us know if we can help. As always, thanks for reading, and take care.

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