A Look at How Businesses in Every State Handled the Pandemic and How Their Response Impacted Workers
The Great Resignation has reached unprecedented levels. A record 4.5 million Americans quit their jobs in November, another 4.3 million quit in December and a record 10.9 million U.S. jobs have remain unfilled since September, according to the Bureau of Labor Statistics report released on Feb. 19.
The COVID-19 pandemic has been dark for many reasons. In addition to the sheer number of lives lost, people all over the world saw their everyday routines thrown into chaos and the Fed estimates that 200,000 U.S. businesses did not survive the pandemic.
For those who were fortunate enough to remain solvent, they found their normal ways of doing things no longer worked. Many had to pivot and reinvent their business models only to find they could not retain employees or hire people to carry out company goals.
Experts propose myriad reasons for the Great Resignation including health and safety concerns, wages, and remote work, government payments and high asset prices to name a few, but the phenomenon remains puzzling.
One thing is clear, employers may need to re-evaluate their policies if they want to attract and retain top talent in 2023 and beyond.
But what does that look across the nation as subsequent variants create unease for millions of Americans, and the pandemic turns endemic? How do businesses get back to normal and what does that even look like?
To help answer these difficult questions, we analyzed data from the U.S. Bureau of Labor Statistics to determine which states saw the most robust response from businesses as well as exploring whether a strong pandemic response positively impacted companies’ ability to keep workers from quitting as part of the Great Resignation.
States with the Largest Increase in Quit Rates
The quit rate has climbed steadily over the past decade, rising nationally by 74 percent and it rose by a staggering 22 percent nationally between 2020 and 2021.
The average seasonally adjusted monthly quit rate in 2021 was 2.8 percent nationally, rising as high as 3.9 percent in Alaska and as low as 1.8 percent in New York. While that may seem like a low rate, when you compare that to the overall number of employed Americans, roughly four million people are quitting their jobs every month.
How Did Businesses Respond to COVID?
Millions of businesses changed the way they do things in response to the pandemic, and many of those changes are expected to be permanent.
The U.S. Bureau of Labor Statistics Business Response Survey released in February 2022, shows nearly 15 percent of employers increased base wages, more than one-third increased telework, and 18 percent mandated COVID-19 vaccinations.
To determine which states had the most robust response from its business community, we measured each states’ percentage in each of the eight common business responses above and compared it to the national percentage. California had the No. 1 most robust response, followed by Washington, and Rhode Island, while North Dakota had the weakest response, followed by Nebraska, and Wyoming.
Drilling down into the individual categories, California’s nation-leading ranking is related to its top 10 positions in six of the eight categories. The only areas in which the Golden State is outside the top 10 is when it comes to wages. California is still slightly above the national average in the percentage of businesses that increased wages (15.8 percent vs. 14.5 percent).
At the other end of the spectrum, North Dakota ranked last or second to last in six of the eight categories. Its highest ranking was 25th for the percentage of employers that started offering paid leave for dependent care.
One factor that we didn’t include in our state-level analysis because too many states failed to submit the data to the BLS was the rate at which businesses expect to continue telework, but this is an interesting wrinkle to consider. In no state did the majority of employers increase telework, but among those that did, the majority expect to maintain that arrangement. Nationally, just over 60 percent of firms that increased telework say they will continue, while that number was highest in Illinois (69.3 percent) and lowest in West Virginia (36.4 percent). We did not consider this a ranking factor in our analysis because data was missing for five states, including New Jersey, which we assume would have an above-average value in this category.
Did COVID Response Keep Workers Onboard?
It’s clear that employers have made many changes to cope with the economic burden on their workers during the pandemic. Have all those changes paid off? Looking at this from the state level, there are some notable statistical correlations.
Of the four categories we looked at, health and safety requirements were the most strongly correlated with a low quit rate in 2021. The quit rate refers to the percentage of all workers who quit their jobs in a given month.
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We calculated the seasonally adjusted average for 2021 in each state and compared those rates to the points we awarded above to each state based on their business response to the pandemic.
Among the 10 states with the lowest quit rates for 2021:
- Three were in the top 10 for wages
- Five were in the top 10 for flexibility
- Six were in the top 10 for telework
- Eight were in the top 10 for COVID-19 health and safety requirements
While we cannot say for sure whether these measures were the reason workers in these states quit at a lower rate, this is strong and compelling evidence that a broad response to the pandemic helped companies retain employees.
Quit rates vs. business pandemic response
Our analysis found 22 connections between states that had the 10 lowest quit rates and were in the top 10 in one of the business responses categories.
Washington, for example, which had the sixth-lowest quit rate in 2021 and ranked in the top 10 for all four pandemic response categories.
Three other states among the top 10 lowest quit rates – California, Massachusetts and Maryland -- ranked in the top 10 for three of the four pandemic response categories: health and safety requirements, telework, and workplace flexibility.
Wyoming, which was third from the bottom in how businesses responded to the pandemic, also had one of the 10 highest quit rates.
However, this phenomenon didn’t always hold true in the reverse. Hawaii, for example, the state that ranked first for health and safety requirements also had one of the highest quit rates for 2021.
While correlation does not equal causation, and more study should be done within specific workplaces to determine the extent to which pandemic response influences workers’ employment decisions, this data strongly suggests that the businesses that adjusted their employee policies during the pandemic had less people quit.
Tips for Employers: How To Keep and Attract Top Talent
While the exact reasons for the Great Resignation are not statistically pinned down, as someone who has left a previous career and went on to build a fully remote business, I have a unique point of view on the myriad of factors and what employers can do to win the talent war.
1. Understand why your employees may be likely to quit
The great resignation is striated. The decision to quit a job is individual, but understanding your employees is key to developing the strategies and programs that will keep them and attract more like them.
The most common reasons I hear for employees quitting their jobs in the last 2 years are:
- YOLO (you only live once): searching for more freedom and balance through new career path
- Misalignment with the company's values
- Wanting more flexibility
- Lack of respect
- Burnout
- Few growth opportunities
The pandemic has allowed workers to reflect and reset. The reasons above are driven by an underlying prioritization of:
- Wanting to feel like a valued member of a team
- Wanting their company to be connected to a higher purpose
- Autonomy to set their own schedules
- Healthy work-life balance
- More growth opportunities
- Creative contribution
2. Lead with respect and transparency
Workers today are craving respect, and remote work has widened the pool of good companies to work for. Every company talks about respect, but few are able to truly embody it. One of the lowest hanging fruits that communicates respect is transparency. Transparency involves communicating objectives and responsibilities in a clear way, and it also means involving your employees in the process, so they feel valued and included.
3. Elevate conversations about creativity and autonomy
Great performers feel most connected to their work when they are in roles where they are given the autonomy and responsibility to creatively problem solve, and they are actively seeking out work cultures that encourage creativity and risk taking. These feelings are closely connected to a sense of freedom and purpose. Use case studies and examples of how your teams embody these values within your job descriptions and advertisements.
4. Embrace flexible work
Fact: remote work was a major trend well before the pandemic made it a necessity. Companies that are dead set on getting everyone back in the office full time will lose the talent war, especially for young knowledge workers. At least 50% of small and large businesses that I talk to are making plans to cut office space and embrace hybrid work schedules in some capacity.
5. Cast a wide net
If your company is in a hybrid work situation, or fully remote, employers can widen their candidate search in different locations. There are plenty of free job posting resources to help aid your search.
Conclusion
As COVID-19 morphs from pandemic into endemic, America’s economy is attempting to fully recover and hopefully will eventually enjoy a post-pandemic growth period. However, the Great Resignation remains a difficult hurdle for companies to overcome. The pandemic has caused a sea change in how many American workers relate to their employers. With a record number of open jobs, workers finally have some leverage to find a job they like better.
Methodology
The data in this analysis came from the U.S. Bureau of Labor Statistics, including its 2021 Business Response Survey, the findings of which were released in February 2022. Those survey results were collected from private-sector establishments between July and September 2021. Quit and job opening rates were gathered from the BLS’s JOLTS database, which includes data on job openings and labor turnover statistics for the U.S. and the states going back to 2000.
