Thinking about joining the
Great Resignation?
Despite a better-than-expected July employment report, where the economy added 943,000 jobs and the unemployment rate fell to 5.4 percent, the mismatch in the labor market persists. Paradoxically, with 8.7 million Americans out of work, there are still more than 10 million job openings as of June. (Job openings lag monthly employment by one month.)
Although millions of Americans were due to jump back into the labor pool after school starts, the COVID-19 labor bottleneck could last well into the fall. One economist described the situation like this: imagine if half of the population got divorced at the exact same time—there are probably a lot of great matches out there, but the process of finding the right person, takes some time. In other words, it’s going to take a while for workers and employees to hook up.
Concurrently, the unique nature of the pandemic recession and recovery has done something seismic to the U.S. labor force. Workers at all income levels are thinking about their jobs and careers differently. Many are motivated by dollars, but more and more, they want flexibility or they’re ready to make their side hustle or contract work their main gigs. Before giving notice, here’s what you need to do:
• Schedule MD appointments: Get those routine appointments done while still covered on your current employer’s health insurance plan.
• Explore future health insurance options: If you receive health coverage through your current job, the path of least resistance is COBRA, at least for the next 18 months. You should also investigate the Affordable Care Act (ACA), especially now that the stimulus plan caps premiums at no more than 8.5 percent of modified adjusted gross income (through the end of 2022).
• Review insurance coverage: If you have life, disability or long-term care insurance through work, find out if it is “portable,” which means that you can take it with you when you leave. Know that the cost might be more expensive if your employer is subsidizing your coverage.
• Don’t forget about retirement: When you leave your job, be sure to roll over your existing retirement plan into a new company’s plan, or an IRA Rollover at any major financial firm.
• Side hustlers, get ready to pay taxes: As an employee, you split Social Security and Medicare payroll taxes with your employer. When you fly solo, you’re on the hook for the total bill, which is 12.4 percent for Social Security. These percentages apply to the first $142,800 of income. Beyond that threshold (known as the wage base), you don’t have to pay. For Medicare, you are on the hook for 2.9 percent total on all income earned. And if you make more than $200,000 ($250,000 for those filing jointly), you must pay an additional 0.9 percent in taxes. Some of these payments will be returned when you file taxes, but just know that you will need to pay up throughout the year.
Even if you are not ready to participate in the Great Resignation, a hot job market is a great time to use leverage. Figure out what’s most important for you—is it pay, flexibility or other benefits? Then conduct research for your industry and your specific job to find out the range of what people like you earn.
If your boss can’t stomach the commitment of a raise, ask for a one-time bonus, and/or more vacation time, or other benefits like childcare, tuition assistance, additional schooling, or gym memberships.
If it’s work from home (WFH) that you seek, negotiate limited days in the office by presenting your manager/boss with examples of your productivity and samples of your success amid the pandemic WFH period.
Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com.