The Great Blue-Collar Resignation: Low-wage workers lead labor turmoil

Blue-collar workers are fed up with their jobs — the waiters and retail clerks, hotel cleaners, bus boys, and valets.

They're the ones leading the Great Resignation and the ones refusing to go back to work — even without generous unemployment benefits that expired in September.

Their defiance comes as their old employers beg for workers, creating an opening for better pay and potentially an entree into a new profession altogether.

“There’s a smaller pool of available job seekers right now, so employers are competing more for them,” Nick Bunker, director of research at Indeed, told Yahoo Money. “They have shifted towards the workers they know are more likely to take a job right now.”

‘A story of people who worked in these low-wage, high-contact industries’

Accommodation and food services recorded the highest quit rate in August at 6.8% and accounted for approximately two-thirds of the increase for that month, according to the Labor Department’s latest JOLTS report. The quits rate in retail trade also increased to 4.7%. Both are well above pre-pandemic levels.

By contrast, the quits rates in sectors like financial activities or information are close to or below pre-pandemic levels.

“What we're seeing in the pickup in the quits rate has really been a story of people who worked in these low-wage, high-contact industries and occupations switching jobs,” Bunker said. “This is really a story about people seeing a really strong demand for labor right now.”

Job openings in both industries reached record highs in the spring and summer months while hiring came in at lower levels.

“Demand remains quite strong to make new hires in those industries,” Bunker said. “At the same time, unemployed workers are less willing to take jobs than they have been in the past. Employers have maybe shifted their hiring towards people who already have a job.”

Unemployed workers also aren’t jumping at jobs, despite the number of openings — a surprising development.

For instance, the current transition rate from unemployment to employment “is closer to what one would expect with an openings rate of 3%” — or less than half of the 6.6% job openings rate in August — according to research by The Peterson Institute for International Economics.

‘People climbing up the job ladder and climbing up the wage ladder’

Those two forces — increased quitting and reluctant jobless workers — are creating conditions where employers are willing to pay more. The biggest wage gains are also going to blue-collar workers.

For instance, workers with a high school degree or less saw their wages grow by 3.9% in September compared to a year earlier, according to data by the Federal Reserve Bank of Atlanta, while those with an associate or bachelor’s degree saw growth of 3.2% and 3.4%, respectively.

“Wage growth is picking up and particularly for job switchers,” Bunker said. “So this really seems to be a story of people climbing up the job ladder and climbing up the wage ladder.”

These workers are also going to other industries with better compensation because those employers have eased work requirements during the pandemic, according to ZipRecruiter Labor Economist Julia Pollak.

“Perhaps before, the only job that you could find that didn't require a college degree and didn't require licensed training was the low-wage job,” she told Yahoo Money. “Now, employers higher up in the earnings distribution are offering people a chance, even if they don't have any prior experience and skills.”

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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