The Great Resignation is much more normal than you think, according to the San Francisco Fed

• Quitting has hovered near record highs over the past nine months, but a new study suggests that's normal.
• Similar quitting happened during fast recoveries in the '50s, '60s, and '70s, according to the San Francisco Fed.

The Great Resignation isn't so great after all, according to a new study from the Federal Reserve Bank of San Francisco.

The resurgence of the US workforce over the past year has brought about an especially tight labor market. Job openings remain near record highs, yet available workers are in short supply. More than 4 million Americans have quit their jobs every month since June, and wage growth is booming as employers struggle to attract workers. Whether you call it a labor shortage or the Great Resignation, the current environment is extremely unusual.

That doesn't mean it's unprecedented, Bart Hobijn, an economist at the San Francisco Fed, said in a study published Monday. Hobijn found that widespread quitting and job shakeup are common during fast economic recoveries when employment growth was strong. The current situation isn't an oddity, but the latest example of a relatively normal trend, according to the study.

For starters, elevated quitting is closely linked to high payroll growth, Hobijn said. The reasoning is simple: Americans tend to only quit their jobs when they're confident they can find a new one relatively soon. The pandemic recovery has featured both stellar job growth and quitting, particularly in the service industries hit hardest by the pandemic.

The relationship between quitting and job creation isn't just true across industries, but over time as well. Hobijn found that similarly strong waves of quits in the manufacturing sector occurred in 1948, 1951, 1953, 1966, 1969, and 1973. Those years align with periods when the US was rapidly creating jobs.

Part of the reason why the Great Resignation seems so unusual is simply because it doesn't show up in the most popular quits-rate data. The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey, which measures quits, only includes data going back to 2000, when the modern version of the survey first started.

Since the recoveries of the 2000 and 2008 recessions were relatively slow, they didn't fuel the same kind of intense quitting that's taken place over the past year, Hobijn said. Therefore the current quit rate of 2.9% seems extraordinary, when really it's similar to those seen after the downturns of the 1950s, '60s, and '70s, based on similar data from an older survey tracking quits in the manufacturing sector during those decades.

It's also more appropriate to call the phenomenon a Great Renegotiation instead of a Great Resignation, Hobijn added. Quits measured in the JOLTS survey track job changes as well as those fully leaving the workforce. As such, the combination of near-record quits with near-record job openings suggests workers aren't walking out en masse, but instead switching jobs for higher wages, better working conditions, or better work-skillset matchups.

It's likely that, as the jobs recovery slows, the job openings and quits rates will ease as fewer workers move from one employer to another, Hobijn said. That will remove some of the upward pressure on wage growth, he added.

Still, that cooldown likely won't come until late 2022, the economist said. Data out on Friday showed the US still adding jobs at an extraordinarily strong pace and wages continuing to surge higher through March. The blockbuster job growth won't last forever, but until it fades, expect the Great Resignation — or Great Renegotiation — to remain strong.