The Great Resignation, Entrepreneurship and Stocks

Table of Contents

The pandemic has changed the way American’s view the workplace, and mostly for the worse. A mass exodus of employees known as “the Great Resignation” is putting many employers on edge. Understanding this shift in talent is vital for investors: a company is only as successful as the employees that constitute it. 

In this article, projectfinance will take a closer look at the reasons for these departures, as well as the rise of entrepreneurship. Additionally, we will examine a few companies/industries which may benefit/lose from this unparalleled shift of labor.

 Highlights

  • 95% of employees are considering changing their jobs.
  • Many of those quitting their jobs are becoming entrepreneurs.
  • The Great Resignation may provide investors with numerous opportunities. 

Employees Aren’t Happy

Monster.com recently released shocking results from a poll they took. The results are almost impossible for investors to ignore and present a nightmare scenario for HR professionals:

  • 95% of employees are currently considering changing jobs
  • 92% of employees plan to change industries
  • 63% of employees have been searching for a new job for the past 1-3 months

This search has been fueled by a historically unparalleled job-seekers market.

Why the Unhappiness?

According to Monster, burnout and a lack of growth opportunities accounted for 61% of the discontent. 

Adding to this stress, many more employees are being forced to return to the workplace. 

Teleworking has fallen quite dramatically from its height of 35.5% in May 2020 to its current level of 14.4% (July 2021).

But this alone can’t possibly make up for such discontent in the labor force.

When I think about the mass exodus of American workers I first begin to wonder why. How is it possible so many Americans are throwing away lucrative careers?

The American Way Redux

The security and stability a job offers can make it difficult to walk away from. It gets in our blood and changes who we are. This dependency runs parallel to the pillars of American thought, as written about beautifully in Ralph Waldo Emerson’s “Self-Reliance”.

I began my career 15 years ago at a small company where quite literally every employee loved their job. That little company has since been bought three times, and on my last day, I didn’t know a single employee who was happy. 

If I could change the words of Tolstoy a little bit, I could say, “All happy companies are all alike; every unhappy company is unhappy in its own way.”

Perhaps we, as a nation, were not able to see our unhappiness until we were able to step back.

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The 800-Pound Gorilla From a Distance

In this great step back, Americans have gained perspective. Americans look back at their old workstation, train, and managers through a telescopic lens. Through that lens some are seeing Goliath, or that “800-pound gorilla”, flapping its arms in a desperate, ostensibly caring gesture (insurance reasons), to get us back. 

Many Americans are saying, “No thanks, Mr. Gorilla.” 

In April, a record 4-million employees shook their heads together. Take a look at the center line on the below chart from the Economic Policy Institute.

So where are all of the people that constitute this sharp rise going? What are their plans?

Entrepreneurship on the Rise

A lot of people are following in the footsteps of their parents and grandparents by starting their own businesses. According to NPR:

“Americans are starting businesses at the fastest rate in more than a decade. By September of 2020, applications for the employer identification numbers (EIN) had surpassed 3.2 million for the year, up more than 500,000 compared to the year before.”

It will be a long and arduous journey for these ambitious souls. Barriers to entry are high in many sectors. Sheer luck will play a large contribution to their success. The Chamber of Commerce shows us just how hard:

  • 80% of small businesses survive their first year 
  • 70% of businesses survive only 2 years
  • 50% of businesses make it to the five-year mark

There will be the inevitable “return to thy master”, with millions of employees returning to their old employers with their tails between their legs. 

But a few will indeed make it, and they will require more employees, and soon they will capture the gorilla’s attention.

American isn’t the only country whose citizens are rolling up their sleeves and going their own way; Forbes reported that the number of individuals filing to start their own company has been skyrocketing around the globe.

Great Resignation Winners

If the Great Resignation stays the course, it will have a material impact on stocks and industries. Here are a few ideas as to which industries and companies may benefit from the great shift in labor.

Nasdaq Growth

Thomas Edison once said that “Discontent is the first necessity of progress.”

The most discontent of workers in today’s labor market is relatively young, most of whom are in their early and mid-career. They have a lot of time in front of them. So what is it young people know?

Technology. An extraordinarily successful company I used to work for had a tech department that was run almost exclusively by ex-Starbuck employees. I can’t help but wonder where all these kids quitting their dead-end retail jobs will take our economy in ten years. 

In addition to retail workers leaving their jobs, “high-tech” employees were also at the top of the resignation list. High-tech typically employs some of the brightest minds in the country. What will they create when given complete liberty?

An exchange-traded fund well suited for up-and-coming tech companies is Invesco’s NASDAQ Next Gen 100 ETF (QJJJ).

Small-Caps

But the tech industry will not alone benefit from the Great Resignation. A predicted low-interest-rate environment for the foreseeable future should help to be a catalyst to the success of all new businesses. With talent shifting from large-caps to smaller capitalized companies, indexes such as the Russell 2000 can’t be ignored. 

Though small-caps are currently priced at very high levels, getting some exposure in the next dip could prove lucrative.

A broad-based ETF, such as Vanguard’s Small-Cap ETF (VB) could pay off well in the future.

Artificial Intelligence

Remember when artificial intelligence (A.I.) used to be the predominant fear of the US workforce? Well, post-pandemic, it’s still there. 

Back in 2018, Elon Musk actually said of A.I., “Mark my words — A.I. is far more dangerous than nukes.”

The Great Resignation will only precipitate the evolution of A.I. in the workplace. Companies are beginning to recognize that they no longer require “someone” to fill a role, but “something”.

Exchange-traded funds like The ROBO Global Robotics & Automation ETF (ROBO) are positioning themselves to capitalize on this shift to robotics and automation-enabled products.

Top Reviewed Companies

Not all employees looking for new careers are hoping to start a new business. Many simply want to be treated better. 

So what companies treat their employees the best? According to Glassdoor, a few of the best publicly-traded companies to work for, as rated by present and past employees are:

responsive winners

Great Resignation Losers

Just as the Great Resignation will have its winners, there will be losers as well. 

Retail

No industry is losing more employees in the Great Resignation faster than the retail industry. 

According to Kate Morgan at the  BBC

“...the American retail sector has seen more recent resignations than any other industry. Just fewer than 650,000 retail workers quit in the month of April alone, according to data from the Labor Department.”

Why? Many retail and service workers (deemed “essential” during the pandemic) feel themselves to be overworked and underappreciated. As a result, many of these employees are beginning to think long-term. They are willing to make short-term monetary sacrifices to obtain upward mobility.

Opportunities in Retail

With that being said, there are some retail companies that are very well-positioned.

Amazon (AMZN), Wal-Mart (WMT), and Costco (COST)  all have very promising futures. The pandemic’s long-term impact on these companies can’t be ignored, and they should weather the storm just fine.

Healthcare

Perhaps the most critical sector in the country, healthcare, has been losing a lot of talent. From March 2020 to March 2021, Forbes reported that this industry had an increase in resignations of 3.61%. For the future of this country’s health, that number is very scary.

Worst Reviewed Companies

Nearly all job candidates will check their potential future employers out on review sites like Glassdoor.

Not all reviews are positive. The Great Resignation shows us that salary is not everything anymore; people care how they are treated

Here are a few companies that could be hemorrhaging talent due to their low ratings.

Final Word

As of right now, many believe the Great Resignation will not have a material impact on the economy. Just like inflation, many experts are calling the phase “temporary”. 

However, you will never regret being prepared for the day if/when they are proved wrong.

Mike Martin

Mike Martin

Mike was a writer for projectfinance. He has spent over 15 years in the finance industry, working for such companies as thinkorswim, TD Ameritrade and Charles Schwab. His work has appeared in the Financial Times, the Chicago Sun-Times, and The Buffalo News.

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