The Great Resignation – Compensation Or Lifestyle?

At the start of the pandemic, shelter-in-place directives forced employers to embrace the ongoing technological shift that has made remote work possible for decades. When you consider the ubiquity of cloud technology, laptops, or even shared directories today, the ability to work from home has progressed immensely in the last quarter century.

In 1995, 9% of the work force telecommuted a few days per month per Gallup. As of mid 2020, the percentage of Americans who telecommuted was recorded at 49% while the number of remote workdays per month registered at 12 (out of 20).

As more companies offered remote work options, many "knowledge workers" elected to abandon those employers who insisted on in-office attendance.According to the USA Today:

50% of workers would take up to a 5% pay cut to continue to work remotely at least part-time post-pandemic. About 25% of those surveyed say they would quit their jobs if they could not work remotely.

Regarding workers who must be on-premises, other factors become part of the calculation. Being at work brings to the fore a variety of wellness, healthcare financing, public policy, and childcare issues. Increased exposure to coronavirus, abusive customers debating mask policies, lack of national healthcare, no paid-leave policies in many locations, sudden school shuttering necessitating scrambling for childcare has resulted in several concluding "at my current pay, it is not worth it."

These factors have disparate impacts based on income, sex, education, race, ethnicity or even neighborhoods. Even more so when pay is stagnant or advancement is not likely. While the Great Resignation has been overstated in some respects, some of the underlying signs must be recognized. Understanding why employees have quit or might be at a greater risk of quitting is the first step in recruiting and retaining staff.


Companies who ignore the shift in attitudes towards remote work do so at their own risk. They are committing an unforced error which reduces their attractiveness to potential employees. The United States has greater income disparity today than it did during the Gilded Age. Relatively speaking,employees have not benefitted from their increased productivity over the past five decades. The discrepancy in health risks and childcare inadequacy has been laid bare by the ravages of coronavirus and workers are demanding more.


Overreacting to short term swings is never advised. Historically, there are plenty of examples of inter-temporal imbalance between supply and demand prompted by exogenous factors. For example, car rebates became a marketing tactic in the mid 1970s. By the early 1980s, auto executives shared this conclusion published in the New York Times:

Although rebates are the equivalent of price cuts, Miss Keller noted that they were always temporary and that list prices remained unchanged. And, she added, studies by the manufacturers themselves indicate that the effect is fleeting. ''The auto companies have concluded that they do not create new demand; they only make people already inclined to buy a car buy sooner.”

It would be a mistake to think that the Great Resignation was a function of "pent up resignations" in the job market - that is resignations backlogged due to economic uncertainty immediately following the declaration of the pandemic. Like it or not, societal expectations of women's roles in childcare has tilted a "she-cession." The Internet has simultaneously created disintermediation and increased one-to-one connectivity and has fostered "the gig economy." Alvin Toffler's Third Wave described economies transitioning from the industrial age to the information age (following the second wave movement from hunters-gatherer to agriculturalist).

While "gig workers" might be suitable in many instances, it is less plausible for those companies invested in intellectual property, institutional knowledge, and sustained focus.

Change poses risks for some, but opportunities for others. The bottom line is employers should expect to offer more flexible employment options - including remote work. Employers should budget for higher compensation, additional IT equipment, and more training. The funding for higher compensation might be found in the roughly $10,000 saved per year in office rent and other overhead for remote status workers. In addition to compensation, leadership matters. A recent LinkedIn article supplied metrics to the term "people leave managers, not companies” as its survey indicated

75% of people quit their job to “get away from their manager at some point in their career.”

Going forward, companies will have more success trying for the best fit while recruiting and being flexible for retention. Knowledge workers have high degrees of aptitude and creativity. Shouldn't they be extended some latitude to contribute and benefit in customized, if not unique ways? Work life balance issues have permanently affected the labor market and workers conceptualization of "returning to the office." At William K. McLaughlin and Associates, we have been helping match talented individuals to successful companies in unique ways. Call us today to assist your firm in your recruiting efforts.

-by Pat

Jan 10, 2023