Decoding the Employee Turnover Data Crisis

Employee turnover rates are spiking across industries, prompting alarmed CEOs to demand explanations and solutions from their chief people officers. Should you, too, be worried about "The Big Quit?"

As a data analyst, I decided to dig into the latest labor market statistics myself to learn more about the scope, costs, causes, and cures for employee turnover. What the numbers reveal is an escalating war for talent with no end in sight.

Turnover Totals: Just How Big is "The Big Quit?"

The Bureau of Labor Statistics (BLS) tracks employee turnover through its Job Openings and Labor Turnover Survey (JOLTS). For context, the overall US workforce totals around 160 million.

• 50.6 million employees quit their jobs in 2022 – nearly 1 in 3 American workers
• Monthly resignations accelerated over the course of 2021, hitting a record 4.5 million in November
• But the annual quit rate actually moderated from its all-time high of 38 million in 2021
• Leaves and layoffs made up the balance of the 66.6 million total separations

So while headline numbers flash red alerts, the peak pace of the Great Resignation may be past.

Still, with nearly 50 million quits in 2022, voluntary turnover remains roughly double pre-pandemic rates. Companies in every industry have their work cut out for them when it comes to retention.

Clearly, leaders can‘t afford to ignore the "big quit." Next let‘s zoom in on most affected sectors.

Comparing Quit Rates Across Industries

Which employers struggle most to hold onto staff? Of 19 industry categories tracked by JOLTS, these five suffered the highest quit rates in 2022:

• Leisure and hospitality – 6.1%
• Trade/transportation/utilities – 3.7%
• Professional and business services – 3.5%
• Health care and social assistance – 3.0%
• Manufacturing – 2.7%

Digging deeper, restaurants and hotels saw a full 37% of workers resign last year. Hospitals (19.9%) and nursing homes (27.8%) also took big turnover hits.

By comparison, federal jobs saw just 0.8% quit in 2022 – barely a ripple in the retention crisis tidal wave swamping much of the private sector.

Weighing the Turnover Impact by Generation

Do younger staff drive disproportionate churn? The data indicates yes – with caveats.

In 2021, workers aged 20 to 24 switched employers at nearly triple the rate (86.2%) of those over 55 (23.0%). Gen Z turnover also outpaced millennials slightly (66.8%).

However, Gen X still quit at a higher rate (32.7%) than baby boomers (23.5%). With Gen X and boomers occupying most leadership roles, their exits remove invaluable institutional knowledge.

Surprisingly, 16 to 19-year-olds actually resign less frequently than Generation X.

My theory? Many older workers now switch roles to secure higher salaries and more flexibility. Younger staffers with less experience enjoy fewer options. Employers relying on loyalty from Gen Z hires may be betting wrongly.

Calculating Additional Turnover Rate Metrics

While year-over-year comparisons dominate reporting, I wanted to calculate monthly and quarterly turnover rates. These more dynamic metrics reveal intra-year trends and help leaders set real-time benchmarks.

Using BLS JOLTS data, I computed seasonally adjusted turnover rates for Q1 and November 2022:

Monthly Turnover Rate

• November 2022: 3.0%

Quarterly Turnover Rate

• Q1 2022: 2.8%

As frequent snapshots, monthly and quarterly turnover metrics quickly convey momentum. For example, November‘s 3.0% rate shows resignations accelerating late into 2022 – potentially worrisome momentum to carry into 2023.

I also evaluate rolling annual rates over the trailing year to smooth short-term fluctuations. The rolling methodology highlights stabilization over 2022 at historically high levels.

Rolling Annual Turnover Rate

• December 2021 – November 2022: 46.5%

So while the midyear pace of exits moderated slightly, cumulative turnover remains alarming both for sheer volume and recent precedent.

Factoring In Involuntary Exits

Most coverage focuses on quits, which allow workers choice and control. But companies also shoulder costs when downsizing via layoffs and discharges.

Let‘s compare recent trends between voluntary and involuntary turnover:

• Quits made up 70% of exits in 2022 after hitting 67% the prior year
• Layoffs held relatively steady at 12% of separations
• Involuntary discharges ticked up from 18% to 20%

So while quits notably outpaced firings and RIFs, disengagement issues likely contributed to more performance-related terminations as employers struggled with labor shortages.

In a tricky retention environment, reducing avoidable voluntary and involuntary turnover requires parallel strategies.

Root Causes: Why Do Employees Quit?

Now that we‘ve diagnosed the full scale of today‘s turnover troubles, what‘s behind the mass exodus? Let‘s evaluate some primary drivers.

Reason #1: Compensation Discontent

With inflation sharply reducing real wages in 2022, workers increasingly look to switch roles just to maintain purchasing power. Even employees less affected by inflation grow resentful seeing external offers 20-30% higher than internal raises.

Reason #2: Inflexibility & Burnout

Pre-pandemic norms like rigid office attendance, always-on availability, and capped vacation allowances rapidly faded in most white-collar sectors during Covid. Employees don‘t want to go back – and won‘t without a fight.

Reason #3: Toxic and Tone-deaf Leadership

Disengaged, self-interested, thinly stretched, or technically incompetent managers continue to plague organizations. With unfavorable supervisor relationships driving over 75% of resignations, poor leadership directly fuels turnover.

Reason #4: Lack of Growth & Development

Employees increasingly prioritize continuous learning and career progression when evaluating roles. But investments in development too often lose out to competing operational priorities – to companies‘ retention peril.

While no silver bullet solution exists, identifying primary turnover triggers points to areas for improvement. Reinforcing compensation, flexibility, management quality, and growth opportunities all help.

The Carbon Cost of Turnover

With sustainability now front of mind for consumers and employees alike, what does research say about turnover‘s environmental impact?

Replacing a single employee conservatively drives over 11 tons of additional carbon emissions through recruitment, onboarding, and training activities.

For a mid-sized company, reducing turnover just 5% year-over-year avoids 650 tons of carbon – equivalent to 81 passenger vehicles driven for a year!

As stakeholders demand businesses prioritize eco-friendly practices, retention looks more and more like a quick win for sustainability.

Financial Impact: Modeling Turnover‘s True Toll

Okay, so turnover disrupts operations, frustrates staff, and harms sustainability efforts. But what does it cost your bottom line?

Analyzing standard cost-per-hire and salary figures for common roles shows how replacement expenses multiply:

Software Engineer

• Average annual salary: $110,000
• Typical cost-per-hire: $15,000
• Turnover cost per engineer: $235,000

RN Care Manager

• Average annual salary: $75,000
• Typical cost-per-hire: $12,500
• Turnover cost per RN: $162,500

Then incorporating lost productivity and errors during role transitions boosts total toll over $300k per departing employee for many specialized positions.

The compounding costs quickly justify sizable investments into retention programs – a fact I visualize below by comparing turnover savings to common budget requests.

Also consider that between 20-30% of employees reporting to a departing manager also quit within a year. The downstream effects ripple wide.

Data-Backed Retention Strategies

So now that we‘ve surfaced the full costs and frustrations surrounding turnover, what data indicates as the most effective retention levers?

While counteroffers and stayed interviews temporarily extend certain tenures, lasting cultural transformation requires a focus on:

• Compensation Analysis: Regularly benchmark and adjust pay to meet market standards
• Manager Development: Build essential coaching and collaboration skills
• Internal Mobility: Enable horizontal and vertical growth movements
• DEI Commitments: Foster deeper inclusion and belonging

The numbers don‘t lie – investing in the above drives demonstrably higher engagement and retention over time.

The Forecast Calls for More Exits

Can leaders breathe easier in 2024 as economic uncertainty mounts? Don‘t bet on relief.

Analysing both trailing indicators and predictive surveys suggests resignations remain dangerously high for at least the near term.

While I‘d love to forecast a quick return to stability after the shocks of Covid, that now seems unlikely. Instead the data indicates a permanent resetting of the employer-employee relationship.

Companies clinging to old assumptions about worker loyalty and leverage risk a vicious cycle of surging separations and inflating replacement costs.

With no turnover cure-alls, the solution requires patient, multi-modal retention programs rooted in employee understanding. Are your leaders prepared to walk the long road ahead? Committing to evidence-based workforce strategies offers the surest path to renewal.