The so-called ‘Great Resignation’ has roiled the U.S. labor market. Most employee resignations have come in the retail and hospitality sectors but low labor force participation also impacts corporate office occupiers, according to a new report by CBRE. The impact on office occupiers is mixed, though, with the Professional and Business Services sector struggling the most, while Tech and Financial Activities have been largely unaffected.
The U.S. labor market has rebounded since the pandemic began in March 2020, for the most part. But the quit rate (the number of people leaving jobs as a percentage of total employment) was 2.8 percent in January 2022, up from 2.3 percent during the same month in 2019. CBRE said this translates to about 4.3 million workers quitting in January 2022, up 29 percent from the January 2018 and 2019 average. Office jobs recorded 21 percent of quits in January 2022, which is actually slightly lower than the 2018-2019 average of 24 percent.
Quits have been above the pre-pandemic average for the Professional and Business Services sector, which includes back-office sectors and typically employs many entry-level workers. Professional and Business Services has also logged the most significant wage growth. Back-office support roles, administrative operations, and call centers are seeing 7-plus percent wage increases over the past three years. The high quit rates aren’t as much of a factor for office occupiers, but something to still keep an eye on.
“As office-using employees return to the office on a more regular basis, turnover could rise if people are unhappy with their employer’s policies or in-person experiences,” CBRE said. Raising wages may help corporate occupiers, but it’s not a silver bullet.
CBRE gave several recommendations, one is embracing flexible workplace policies. Employees have more leverage than ever, and they’ve gotten used to remote work. “This is uncharted territory, so malleable workplace policies are considered a best practice for now,” CBRE said. The future of work and the office are still up in the air, but one thing has become clear: low labor force participation will be a factor in many decisions for the near future.