Significant media attention has been given to the phenomenon of “quiet quitting”, the decision by an employee to do the bare minimum required at work. Given the challenges that companies as well as employees have faced during the Covid pandemic, quiet quitting has drawn sharply divergent opinions, with some viewing quiet quitters as slackers with no corporate citizen spirit and others considering them as people who are reasonably holding up their end of the employment bargain and carving out space for their personal lives. Given that according to one poll, quiet quitters make up a stunning 50% of the US work force, quiet quitting is an issue with massive business management, economic and social implications. This article looks at the economic impact of quiet quitting and suggests that giving employees an additional economic interest in the companies where they work may be a way to increase employee engagement, encourage longer-term work commitment and build company value.

The Great Resignation and Quiet Quitting

Quiet quitting is a phenomenon that is connected with the Great Resignation movement that began in 2021 and involved unprecedented amounts of people leaving their jobs. In the United States, in April 2021 a record 4,000,000 people quit their jobs. Over the course of the year, more than 40,000,000 people sent in their resignation notices and left for greener work pastures. Moreover, the Great Resignation has not only been restricted to the United States, a country with a notably hard-driving work culture, but has also extended to other parts of the world with markedly different work norms, including Europe, Australia, India and China.

In 2021, over 40,000,000 workers in the United States left their jobs.

Many reasons have been cited for the Great Resignation including:

• large Covid-driven labor shortages and the ability of workers to move to other positions with better pay and work conditions;
• increased employment mobility that was created due to Covid-related remote work policies;
• sharp increases in workloads due to company staffing shortages;
• a desire for a greater work-life balance;
• generational perspectives on work; and
• concerns about Covid infection at the workplace.

Quiet quitting is driven by many of the factors that lead to the Great Resignation. However, the term itself is a misnomer, as quiet quitting employees in fact do not quit but rather “work-to-rule” and do the minimum amount of work required for their job. This means leaving punctually at the end of the work day, not accepting any additional work tasks and not doing any work outside of scheduled work hours.

Quiet quitting means doing the bare minimum required for one’s job.

While the existence of some portion of the workforce doing as little as possible is by no means new, what is highly noteworthy is how widespread the quiet quitting phenomenon appears to be. According to one poll, more than 50% of the US work force is engaged in quiet quitting. That is more than 80 million people, the approximate entire population of Germany. This raises large economic and social issues, particularly for countries that are at economic inflection points where large amounts of debt, the disappearance of traditional industries and political gridlock make large-scale pivoting difficult.

Quiet quitting raises large issues for countries that are at economic inflection points.

Quiet quitting is, not surprisingly, the subject of sharply divergent viewpoints. For some companies that are struggling to remain in business following the difficult Covid years and are facing labor shortages, quiet quitting is viewed as a form of slacking off and willful disregard of broader corporate realities and needs. On the other hand, for employees who have seen workloads steadily increase and encroach upon their personal lives without additional compensation, quiet quitting is viewed as simply complying with agreed employment terms and insistence on having work-life balance.

The Corporate Perspective

For many companies, the concept of quiet quitting raises the specter of a perfect business storm because it represents a massive loss of work productivity at precisely the time when the Covid years have put large parts of corporate America on the back economic foot. Just when all hands on deck are needed, many employees are saying that working on the deck is not part of their job description. According to one estimate, quiet quitting has resulted in a loss of US $150 billion.

Labor market statistics add gloom to this picture. According to the US Bureau of Labor Statistics, productivity declined over the last year across all key market segments, with business and non-farm businesses registering a productivity loss of 1.4%. More troubling for corporations who have jumped from the pan of revenue losses due to logistics chain disruptions into the fire of inflation, this loss of productivity comes despite large increases in labor costs. Unit labor costs over the same period in the business segment increased by 6.2%.

While it might be thought that a drop in hours would be responsible for this productivity decline, in fact hours worked have sharply increased, with for example a 5.2% increase in the durable goods segment. The combination of lower productivity, higher labor costs and higher hours work would seem to set the stage for increased dissatisfaction from both management as well as employees.

Corporations have the challenging task of somehow reversing the unfavorable labor cost and productivity calculus. Part of the problem may be solved by labor market decompression as more people go back to work and labor markets stabilize. Declining opportunities elsewhere may cause a significant number of quiet quitters to see the economic utility of raising their workplace game.

But the statistics suggest that labor market stabilization will not solve the core problem – which is how to build corporate value given that massive amounts of workers appear to be highly dissatisfied with the workplace status quo. A significant amount of value must come not from simply adding new job benefits but rather from whole-scale innovation and creating a much larger economic pie, which appears to be at real odds with quiet quitting.

The Labor Perspective

Considering this the other way around, it is reasonable for workers to expect that the terms and conditions that were agreed to prior to working are adhered to during the course of employment. If not, and significant additional work is expected for no compensation, the arrangement becomes one-sided in the employer’s favor. Beyond issues of legal and economic parity, it is also perfectly understandable that employees would expect that clear lines be drawn between their professional and personal lives. This is necessary for the physical and emotional well-being of workers and their families.

Yet it is important to consider these rationales, sound as they may be, in the context of larger short and long-term economic realities. It is probable that as labor markets readjust job market offers will fall and labor market competition will increase. Moreover, if declining productivity and rising labor costs force companies to downsize and cut expenses, employees who have been engaged in quiet quitting may be some of the first to go. Exiting a job in a tightening labor market may force workers to accept worse positions which will set them up for further economic and occupational downscaling. This has negative implications for employees, companies and society as a whole.

There are, of course, larger issues at stake for employees than short-term labor market strategy and work vs. benefit calculations. A worker’s time at a job is an asset that can be used productively or wasted. By using time at work to try to build and learn new skills, employees can build their own economic value and put themselves in a position where they will have more labor market choices regardless of what type of work/life balance those choices might entail.

A Path to Value-Building Worker Engagement

All of this presents corporations with a significant dilemma. How to keep companies competitive and build corporate value and at the same time ensure that workers are happy and engaged? And how to do so when it appears that the classical macroeconomic and microeconomic tools for generating productivity, including labor market rebalancing and providing additional employment benefits, are not enough?

One potential solution is to give employees a greater stake in the economic future of the companies beyond their salaries. While a very high percentage of companies in Silicon Valley have stock option plans, a tiny percentage of companies as a whole have them. This makes it difficult for employees to see how their economic future is connected to the economic interests of the company.

With stock options, employees could be more motivated to create value for the company and less eager to change jobs, as stock option plans typically contain several year vesting periods. Nor would this mean that employees need to further sacrifice their health and personal life based on a low probability throw of the economic dice, as stock option plans can be built on a combination of years worked with other factors such as KPIs that gauge value creation.

Further, this type of structure would ideally give employees more workplace options than either going above and beyond and work to rule. It would create the possibility, in the interest of building corporate value, of building on their roles in ways that ideally would lead to greater engagement and drive corporation innovation. It would allow work-life balance issues to be viewed not as a fringe economic discussion but rather central to economic progress. This would ideally not only create value, but allow that value to be more broadly shared across the organization.

Conclusion

Quiet quitting is an important economic phenomenon with significant social implications. As it appears that this issue will not be resolved by simple labor market rebalancing, the question falls to companies, employees and society as a whole as to how a more sustainable value creation and value sharing path can be created. Employment models that contemplate providing employees with a greater economic interest in the companies they work for may lead to greater engagement, increase the likelihood of workplace innovation at a time when it is sorely needed and create additional dialogue regarding work-life balance issues.