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A Real-Time Look at ‘The Great Resignation:’ January 2022

Luke Pardue Economist, Gusto 

The most recent data from the BLS Job Openings and Labor Turnover Survey (JOLTS) report showed that the United States is still in the midst of an unprecedentedly tight labor market, with both the job-quitting rate and the number of job openings across the economy at near-record levels. Yet, in December 2021 and January 2022, the U.S. experienced a new surge in COVID-19 cases, exacerbating the current public health crisis and creating great uncertainty amid the continued economic recovery. Platform data from Gusto, the payroll and HR platform serving over 200,000 small and medium-sized businesses, offers insights into how both business owners and workers navigated this latest difficulty in real-time, through the end of January, and at a level of detail not available in public statistics – in particular, by age group, gender, and geography.

Key Findings

  • Quits Remain at Record Levels: Among workers at businesses on Gusto’s platform, quits have risen after coming down from August’s series high of 5%. The quit rate stood at 3.5% in December and jumped to 3.7% in January. While below the summer highs, these numbers are still above last year’s rate of 3.1% in December 2020 and 3.3% in January 2021.     
  • Quits Still Driven by Women: The gender gap in quits widened in January, as women leave work at consistently higher rates: in January 2022, 4.1% of women quit their job, compared to 3.4% of men – a gender gap of 0.7 percentage points.
  • Childcare Disruptions Contributed to the Gender Gap in Quit Rates: The Omicron-driven surge in COVID-19 cases closed schools and daycare centers, driving the elevated rate of women leaving the workforce in January 2022. At the state level, a one percent increase in the portion of households facing school or daycare closures was correlated with a 0.06 percentage point increase in the gap between men and women’s quit rates. States with among the highest rates of child care disruptions, such as Maine and Rhode Island, experienced a gender gap in quits of 1.7 percentage points, while states with some of the lowest rates of child care disruptions saw no gap in quits rates between men and women in January.         
  • Personal Services Hit Hardest: During The Great Resignation, quits have been highest in the personal services sectors—such as Accommodations, Food & Beverage, Sports & Recreation, and Retail—as workers in these sectors search for new opportunities amid a continuing epidemic. In January, quits were at their highest rates in Facilities (7.1%), Food & Beverage (6.8%), and Accommodations (6.5%).
  • Quits Highest in Middle America, Lowest on Coasts: In January 2022, workers were quitting their jobs at the highest rates in Idaho (5.7%), Iowa (5.3%), and Alabama (4.8%) and among the lowest in Rhode Island (2.8%), Maryland (3.0%), and New Hampshire (3.1%).
  • Employment Remained Strong in January, but Workers Saw Hours Reductions: Despite the recent surge in COVID-19 cases, employment growth among businesses on Gusto’s platform remained in line with prior years. Net headcount grew 0.5% in January 2022, just between the 0.22% growth in January 2021 and the 0.77% growth in January 2020. There was, however, a sharp reduction in the average workweek for employees in January: average weekly hours fell to 21.9 hours in January 2022, below the 23.2 hours per week seen in January 2021. Indeed, from November 2021 to January 2022, nearly one-third of workers saw their hours reduced by at least 10%. This pattern suggests employers adapted to this recent COVID wave by scaling back operations, but not shedding employment.

Overall Trends in Quits

First, Figure 1 plots the percent of workers voluntarily terminated (the “quit rate”) among companies using Gusto’s platform, by month, from January 2020 through January 2022. Mirroring public data, Gusto’s quits rate reached a series high in August of 2021 of 5%. Since that point, the quit rate has fallen to 3.4% in November 2021, before rising to 3.5% in December 2021 and 3.7% in January 2022. Though a dip from the record highs, these rates are still elevated compared to last year, when the quit rate was 3.1% in December 2020 and 3.3% in January 2021.

Figure 1: Quits Rate: All Workers

Quits by Industry

Figure 2 presents quits rates broken down by industry. Workers are leaving their jobs at the highest rates in service-sector businesses. The highest quit rates in January were seen in Facilities (7.1%), Food & Beverage (6.8%), and Accommodations (6.5%). This is the fifth straight month these sectors have experienced the highest quit rates, which reflects an economy-wide shift underway, as workers leave service-sector jobs in search of job opportunities with more flexibility and higher pay.

Figure 2: Quits by Industry

Quits Across the Country

Figure 3 plots a map of the quit rate in January 2022 across the US, and Figure 4 features states with the highest quit rates over the past four months – October 2021 to January 2022. These rates are highest in Mississippi (7.1%), North Dakota (6.4%), and Idaho (5.8%). The lowest quit rates were seen in Wyoming (1.5%), Arizona (2.3%), Rhode Island (2.8%), and Maryland (3.0%). A full list of quit rates for all states is presented in this appendix of this post.

Figure 3: Quits by State, January 2022

Figure 4: Quits Rate by State, Past 4 Months: Top 20

Quits by Gender

While public data does not break down quits rates by gender, on Gusto’s platform we can track such a series. As displayed in Figure 5, in August 2021, the quits rate among men was 4.4%, while the quits rate among women was 5.5%: that is a 1.1 percentage point gap in the quits rate by gender, the widest gap on Gusto’s platform since this series started in January 2020. While this gap has narrowed since then, in January 2022 it expanded for the first time since August, reaching 0.73 percentage points (with a quit rate of 4.09% for women and 3.36% for men).

Figure 5: Quit Rates by Gender

What is driving this gender gap in quits? A natural first observation is that this gap has widened and narrowed recently with nationwide trends in school closures – widening to record levels in August and September as the Delta variant prevented schools from fully opening in the fall and opening up again as Omicron forced many schools to return to virtual learning at least part of the week. Indeed, as two out of every three caregivers in the U.S. are women, the additional responsibilities of childcare during these times would be disproportionately added to their plates.

To explore this relationship, we combined state-level data on the female-male gender gap in the quit rate from Gusto’s platform in January 2022 with a measure of school closures in January gathered from the U.S. Census Bureau’s Household Pulse Survey. This measure captures the percent of households in each state who have children under 11 years old and whose daycare or school was closed due to the pandemic during the beginning of January.

Figure 6 plots this relationship between the portion of households in each state facing childcare disruptions in January and that state’s gender gap in quit rates. There is a strong relationship between the level of childcare disruptions and the degree to which women have left their jobs more than men. A one percent increase in the portion of households facing school or daycare closures was correlated with a 0.06 percentage point increase in the gap between men and women’s quit rates. States with among the highest rates of child care disruptions, such as Maine and Rhode Island, experienced a gender gap in quits of 1.7 percentage points, while states with some of the lowest rates of child care disruptions saw no gap in quits rates between men and women in January.
This relationship points to one potential recent driver of The Great Resignation that would be particularly discouraging: women leaving work to care for children during this recent Omicron wave. Recent economic research has found that mothers suffered significant labor market setbacks at the onset of the pandemic due to school closures, and the inability to safely maintain childcare options during this wave risks a further holdup of the economic recovery of this group of workers and of the recovery of the U.S. economy as a whole.

Figure 6: Childcare Disruptions and the Gender Gap in Quit Rates

Quits by Age Group

Similarly, there are important differences in levels and patterns of quits across age groups, which aggregate data can mask. Figure 7 plots quit rates on Gusto’s platform by four age groups: those 15-19 years-old, 20-24, and 25-54 (“prime-age” workers), as well as those 55 and older. The decline in quits that had occurred across all age groups since August has largely halted, as the quit rates for many groups tick up once more. The largest increase from November to January can be seen among 20-24 year-olds, with the quit rate for that group rising from 6.3% to 6.8%. The quit rate for prime-age workers also rose from 3.0% to 3.3%, reversing half of the decline that group had experienced since August 2021.

Figure 7: Rate by Age Group

Hours and Employment Trends Amid the Omicron Wave

The Great Resignation can be characterized as a time of extraordinary competition in the labor market, as employers have been eager to expand and employers have been reassessing the type of jobs they are looking to take and the compensation they expect. These trends ran headlong into an unprecedented surge in COVID-19 cases in January 2022, as the economy hit another bump on the long road to recovery. While many economists predicted this wave would lead to a contraction in employment in January, a much different trend emerged. Gusto data shows that employment growth among small- and medium-sized businesses remained strong in January, as business owners navigate a widespread labor shortage amid optimism about long-term growth prospects, but employee working hours fell significantly this past month, as owners temporarily pulled back operations during this recent COVID wave and as many employees took time off to care for themselves or loved ones affected by the virus.

Figure 8 plots monthly employment growth (as measured by the percent change in headcount) each month from October through January over the past three years. Employment growth in December 2021 and January 2022 was stronger than it was one year earlier. Indeed, headcount grew by 0.1% in December 2021, while it shrank in both December 2019 and 2020. In January 2022, headcount among businesses using Gusto’s platform grew by 0.5% – between the rates of 0.8% in January 2020 and 0.2% seen in January 2021.

Figure 8: Growth, Fall and Winter 2019-2022

Despite strong employment growth in January 2022, this past month also saw a significant reduction in employees’ working hours. Among hourly employees, average weekly hours fell from 29.8 hours in December 2021 to 23.4 hours in January 2022 – below the average weekly hours of 24.7 in January 2021.

This pullback has been most acute in the Personal Services sector, where operations have been particularly sensitive to public health conditions. As shown in Table 1, from November 2021 to January 2022, nearly one-third (32.2%) of workers in this sector have experienced hours reductions of 10% or more, compared to 19% during that same period one year ago.

Table 1: Personal Services: Percent of Employees Experiencing Each Action by January, Relative to November of Prior Year

Taken together, these trends demonstrate that business owners are navigating this latest COVID wave, and the resulting economic uncertainty, in a different way than they have during prior waves. Amid The Great Resignation, employers in January maintained staffing levels – and indeed added workers when they could – but pulled back on operating capacity, which has manifested itself in the form of fewer working hours on average for employees. As the recent Omicron-driven wave begins to ebb, this method of adjustment will likely allow businesses to resume prior levels of operations as demand returns to pre-Omicron levels.


Updated: February 15, 2022

Luke Pardue
Luke Pardue Luke Pardue is an Economist at Gusto, researching how public policies help small businesses and their workers thrive. He received his Ph.D. from the University of Maryland, where he studied the effects of government programs on disadvantaged populations' housing and labor market outcomes. Luke currently lives in Washington, D.C.
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