Goodbye. Farewell. Adios. Sayonara. Workers have been giving their bosses an earful of such words as of late. Last week, the U.S. Bureau of Labor Statistics announced that 4.3 million Americans, or 2.9% of the entire workforce, quit their jobs in August. That was a record-breaking month, piggybacking on previous record months. “The Great Resignation” is real, and it can be seen across virtually all industries.
It’s common to see a surge in quitting when the job market is tight and there’s a cornucopia of open positions. But what’s happening now is unlike anything we’ve seen before. Economists and pollsters are still investigating what’s going on. Are generous government benefits encouraging people to quit? Maybe, but some evidence suggests not. Are people angling for a raise after decades of stagnant pay? Probably, yeah. The family pressures imposed by closed schools, the closing and reopening of businesses, the reshuffling of the population to different locations and industries, and the fear of the virus in face-to-face settings have all also almost certainly played a role. But the historic rise in quitting also seems to be about more than all of this.
In a new working paper, the UC Berkeley economist Ulrike Malmendier suggests there’s something existential behind the Great Resignation: The pandemic and the rise of remote work have changed the way we view our lives and the world.
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The idea that our experiences shape our choices is hardly radical. And Malmendier isn’t alone among scholars in suggesting that soul-searching during the pandemic helps explain the surge in quitting. Texas A&M psychologist Anthony Klotz, who predicted and coined the term the “Great Resignation” back in May, credits “pandemic epiphanies” with motivating many workers to depart their jobs for greener pastures. But “experience effects,” as Malmendier calls them, remain remarkably under-investigated in economics, which tends to be more focused on the cold, material incentives that influence our behavior. Malmendier has been working to change that.
Experiences that shape our economic lives
Malmendier says her journey to unlocking the mysteries of how personal and collective experiences shape our economic choices began when she was thinking about her home. Malmendier is from Germany, and she says the mores of her home country inspired her to investigate the idea that experiences can dramatically affect people’s economic decisions. The Germany she grew up in — and now watches from afar — is one that is hypervigilant …….