The Weekly: A note on quitting

Welcome to The Weekly, where our team shares a few thoughts to take you into the weekend. The July 8th weekly is brought to you by Jared Schepis, one of our investment writers.

A note on quitting

There is a new pandemic spreading across the globe, and it's a surprising virus: quitting. Workers are still departing their jobs at record paces, extending what many have dubbed "The Great Resignation." Professional golfers are leaving the PGA tour in favor of a new league financed by Saudi Arabia, and a mass consolidation is happening in the world of collegiate athletic conferences. All in the name of "better opportunities." Rather, more money.

In 2021, an astonishing 75.3 million American workers quit their jobs. At the time, the economy was flush with cash, driven by historic government intervention in response to the COVID pandemic. A tight labor market incentivized workers to expand their horizons and test their value in the open market. That, coupled with peak workplace dissatisfaction in millennial and Gen-Z cohorts led to a seismic shift in work and a record number of the workforce resigning. Despite darkening economic conditions and looming recession fears, the trend continued throughout 2021 and into 2022. 4.3 million people quit their jobs in May 2022 alone.

The “Big Quit” isn't reserved for any specific job type. It's happening in corporate America, in warehouses, and in elite sports. As mentioned, even professional golfers are leaving the PGA Tour en-masse to a fledgling league financed by the Public Investment Fund of Saudi Arabia. The new league, LIV, has enticed headline-name golfers with splashy compensation structures. Dustin Johnson, the winner of two major championships, was allegedly offered an obscene $150 million just for signing up. And according to some rumors, Tiger Woods received, and declined a $1 billion offer. Yes, that's with a B.

Universities aren't exempt from this "Big Quit." The University of Texas and the University of Oklahoma threw the NCAA on its head when they announced their intended departure from the Big 12 to join the SEC. Of course, we can be naive and assume that Texas and Oklahoma just wanted stronger competition, but the truth is that media rights are driving the realignment in college athletics. ESPN acquired the ten-year media rights to the SEC for at least $3 billion. Just last week, UCLA and USC ditched the sunny skies of the Pac-12 for the frosted tundra of the Big 10. According to some estimates, the Big 10 could fetch over $1 billion annually, and that's before the two Hollywood schools jumped ship.

The "Big Quit" is even spreading to the executive ranks. Last week, the CEO of a $68 billion hedge fund quit to "sit on the beach and do nothing."

So when did quitting become the path to the top? When did the act of leaving lead to the elusive American dream? As kids, we were taught that quitting means giving up. But it seems the rules have changed, and the quitters are playing a new game entirely. For some, it's one of demanding equitable, if not lucrative, compensation for employees and building workplaces that value a healthy quality of life and respect for others. For others, this "Big Quit" is only about getting more money. But that isn't all there is to the story. There are distinctions between these various forms of "quitting." Tying them together seems, at best, misinformed. There are always costs—some greater than others.

After jumping the PGA ship, LIV golfers now have to reconcile a form of moral hazard and answer questions about whether they are "sportswashing" for an oppressive regime. According to Human Rights Watch, Saudi Arabia's government is one that "spends billions of dollars hosting major entertainment, cultural, and sporting events as a deliberate strategy to deflect from the country's image as a pervasive human rights violator."

The LA Times published letters from its readers addressing the climate impact of both UCLA and USC's departure from the PAC-12. Both California teams will now have to travel thousands of miles every time they play an away game. Is a $1 billion annual TV deal enough to offset all that extra jet fuel in the atmosphere? $5 billion?

The broader workforce isn't exempt from the costs, either. A study by the Federal Reserve Bank of Chicago calculated that the "Great Resignation" increased the rate of inflation by up to 1.1% by spurring wage competition. Even further, a study by the job search site Muse found that 72% of workers who recently left their job expressed "surprise or regret." Almost half said they would try to get their old job back.

So, the "Great Quit" isn't without consequences and isn't without regrets. But, there is a strange, almost unnerving quality that ties this societal pattern of withdrawal together. Is it a COVID hangover? Maybe that "grass is always greener" trope is playing out literally before our eyes. Perhaps it is just a form of a carpe diem, a rare chance to seize the day!

Titan’s Takeaway: Economic theory is built on trade-offs. Usually, those trade-offs are subtle: calculated, but nearly instinctive in our decision-making. But today, those once quiet choices are being reexamined, scrutinized, and pried out into the open, leaving us with more fundamental questions. What are the costs of our decisions? How much are we willing to sacrifice for money? Or, what wouldn't we do for money?

In case you missed it

-Watch: The Titan Flash on the Crypto Phone

-Watch: Emily and Pervalle Global CIO, Teddy Vallee discuss the macro environment

Have a great weekend!

Titan Team

The above content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.