With Record Rates of Resignation, Expect More Delays on New Housing
The Great Resignation — the name given to the enormous wave of workers quitting their jobs over the past year — is making headlines nationwide as around 33 million Americans have quit their jobs since the spring of 2021. The largest spike in resignations came in September 2021, when 4.4 million workers quit their jobs, up from 4.3 million in August.
Why Are Americans Leaving Their Jobs?
"The catalyst for it all seems to have been the quarantine and the lockdown where people really reevaluated what they were doing, and what they want to do with the rest of their lives," said economist Mike PeQueen in an interview with MSN.
So, what factors are pushing workers to walk away from their jobs?
- For workers with children, childcare can be both hard to find and expensive. It’s been difficult for people to find childcare, especially as unpredictable school closings persist during the pandemic.
- Generational workers are impacting employment numbers. Older, sometimes immunocompromised folks face a higher risk regarding COVID-19, which has pushed many of these individuals to retire early and permanently leave the workforce.
- Saving money continues to be a struggle, particularly for employees making minimum wage. On average, Americans with incomes in the bottom 60% received $3,450 from stimulus payments. Some workers were able to allocate this money to savings, allowing them the luxury of being more particular about their employment. That could mean using the money to leave jobs that were unfulfilling or undervaluing their skill sets.
- Leverage is the biggest factor. The growing desperation of employers has caused them to offer more generous wages and benefits to new workers, prompting many to quit their previous lower-paying jobs in favor of something better.
As the number of workers quitting continues to rise, so does the number of job opportunities. A more fitting name for this Great Resignation would be the Great Renegotiation as employers will need to step up and compete for workers.
“It is a sign of health that there are many companies that are looking for work — that’s a great sign,” said Ben Ayers, senior economist at Nationwide, in an interview with The Washington Post. “The downside is there are many workers that won’t come back in. And long term, you can’t sustain a labor market that’s as tight as it is right now.”
As workers negotiate for either better conditions in their current jobs or leave to find greener pastures, one sure bet for employers is to offer remote working conditions whenever possible. Remote work quickly became the norm for many workers and is playing a factor in Americans’ decisions about their current jobs and where they’d like to work next.
"Work from home is the holy grail at this point," said PeQueen. "And, we also see people really demanding from new jobs the ability to work from home. Work from home has become the new recruiting tool. If your job allows people the flexibility to work from home for a few days a week, you have a greater chance of filling that job."
How Is the Great Resignation Impacting Idaho’s Real Estate Market?
In Idaho, the rate of resignation is 4.1%, significantly higher than the national average of 3.0%.
While not directly tied to real estate, the impact of Idahoers leaving their jobs will have a ripple effect that extends into our industry. After all, workforce shortages are even more noticeable in regards to skilled building positions, and the lack of skilled workers in construction has been an issue before the Great Resignation of 2021. There were nearly a thousand job openings in the construction field recorded since November 2020, and this number isn’t expected to decrease any time soon. By 2026, an estimated 29% of the current construction workforce in the U.S. will retire.
This labor shortage has hindered the construction industry, which will aggravate existing delays in residential and commercial construction of the state’s housing inventory.
Not only do we expect further delays, but the labor shortage has also spurred higher costs for hiring builders on top of the staggering cost of construction resources. The price of construction resources related to residential real estate has risen by more than 14% from January to October 2021, according to data from the National Association of Home Builders.
Without workers, home construction will continue to be delayed, which will affect the state’s housing inventory. The demand for housing has already outpaced the available housing inventory, so home prices will only continue to rise, which has been a concern for residents over the past year; Idaho’s median home value increased 33.4% from December 2020 to December 2021. Currently, the median home value in Idaho sits at $451,830, over $130,000 more than the nation’s average of $320,662.
How Is the Great Resignation Impacting Idaho?
According to the U.S. Bureau of Labor Statistics, Idaho’s unemployment rate was 2.9% in November 2021, boasting 52,000 available jobs with 0.50 unemployed persons per job opening. Major industries that employ Idahoans include mining, logging/lumber products, construction, and trade, transportation, and utilities.
“In November 2021, quits increased in several industries, with the largest increases in accommodation and food services; health care and social assistance; and transportation, warehousing, and utilities,” a U.S. BLS press release stated in January 2022.
A graph below illustrates the national quit rates by industry for November 2021:
The Great Resignation comes at a pivotal time as businesses scramble to regain the revenue they lost during the COVID-19 pandemic. Americans are beginning to spend on services again and traveling more outside of their home states.
Beyond the impact on the real estate market, a shifting labor force impacts the economy as a whole. A lower employment rate weakens the economic foundation of the state. Individuals without a job don’t have a steady income, after all, which leaves them living off their savings — a practice that isn’t sustainable long term.
The CE Shop readers: How do you see the Great Resignation impacting your careers? Have any of your clients (current or former) quit their jobs? Are agents within your sphere quitting in pursuit of other opportunities? Let us know in the comments below!