Will the Return to the Office Lead to More Inflation?
February 18, 2022
Last year saw millions of Americans voluntarily quit their jobs in search of better pay or benefits elsewhere, with the number of workers quitting hitting an all-time high in November.
The phenomenon dubbed the “Great Resignation,” was partly responsible for surging inflation. A new report from the Federal Reserve Bank of Chicago estimates that the Great Resignation was responsible for one full percentage of last year’s inflation rate. In December, the Fed’s preferred inflation gauge, the personal consumption expenditure index, rose 5.8% from the year before, the biggest jump since 1982.
Now, as Covid cases fall, employers are pushing for workers to return to the office, which may spark another round of resignations. A recent survey from Pew Research found that more than half of workers with jobs that can be done remotely say they want to continue working from home all or most of the time, even after the pandemic.
Workers who do not wish to return to the office have ample opportunity to find work elsewhere. There were nearly 11 million job openings in December, according to Zip Recruiter, meaning there are 58 unemployed workers for every 100 open positions.
This gives workers additional leverage to look for work that will allow them to continue working remotely, or negotiate for higher wages to justify in-person work, which would increase labor costs and add to inflationary pressure.