When you take a look at the average employee turnover rate by industry, you’ll find the business world has been in shambles the last few years.
With turnover rates hitting record highs due to covid, professionals and business owners are being forced to adapt.
During the initial Covid craze throughout 2020, the average turnover rate reached 57%.
In this article, we’ll take a look at a few interesting statistics that highlight the current climate of turnover rates across various global industries.
- The federal government boasts the lowest turnover rate of 0.6%
- Leisure and hospitality has one of the highest turnover rates at 4.6%
- Companies with low employee engagement are at risk of turnover rates from 18% to 43%
- From 2020 to 2022, the average turnover rate dropped by roughly 10%
- In April of 2021, around 3.8 million workers quit their jobs
- Better compensation (35%) and work/life balance (25%) are primary reasons for employee turnovers
- On average, workers earn 5.2% more when they decide to pursue a better opportunity
- Organizations lose 18% of their workforce every year due to turnovers
- The cost associated with voluntary employee turnovers in 2022 was roughly $1 trillion
- Employees who are highly engaged are 87% less likely to leave
Average Employee Turnover Rate by Industry: An Unbiased Look
With the current job market being shaken to its core due to the pandemic, both employers and people in the workforce have been forced to adjust.
Aside from the millions of layoffs that stemmed from the pandemic, millions of more people simply decided to quit.
The pandemic acted as a turning point for many people all over the world, and the job market still hasn’t fully recovered.
However, enough time has passed to gather some unique data points on turnover rates in various industries and why this situation seems so convoluted right now.
1. Which Industry Has the Lowest Turnover Rate?
Looking at the border of the United States, it seems that the federal government comes with the lowest turnover rates.
There are likely numerous reasons as to why this is true, but the federal government only carries a turnover rate of 0.6%.
It’s likely due to a mixture of benefits included with the job and general job security.
Although many people have been looking for new job opportunities, plenty of others are happy where they are.
You’ll also find a few other closely related industries that come with relatively low turnover rates.
State and local government and education sectors only deal with a respective 0.9% and 1% turnover rate.
There are plenty of people who left their government jobs during Covid, but it’s evident there are many others who had no problem staying put.
2. Which Industry Has the Highest Turnover Rate?
While there are many industries that are considered to have high turnover rates, a few have been hit harder than others in recent years.
Based on data as of April 2023, the following sectors have some of the highest turnover rates:
- Transportation, warehousing and utilities: 3%
- Retail trade: 3.5%
- Leisure and hospitality: 4.6%
These percentages may not seem like much, but from a global standpoint, that’s a lot of employees either quitting or being fired.
Every industry will deal with a certain amount of turnover, but the associated costs can be pretty damaging to businesses and the industry as a whole.
You’ll find a wide variety of factors that play into turnover rates, with employee engagement being one of the biggest concerns.
It isn’t possible to pinpoint an exact cause for rising turnover rates, but recruiting, engagement, training, and many other parameters play into this.
3. Low Engagement is Damaging
From company culture to the superiors that are running the show and the work itself, employee engagement stems from many factors.
Managing employee engagement can be challenging if they simply don’t like their job, their superiors, or the company culture.
Regardless of how difficult it may be, it’s a vital component of any business.
Organizations suffering from low employee engagement are at risk of turnover rates ranging from 18% up to 43% higher.
This is compared to companies that are experiencing high engagement from their employees.
Those figures aren’t a guarantee, but it’s a risk companies take by not focusing on and nurturing employee engagement.
Part of this also comes down to shifting demands in the modern workforce, as many people are unhappy living out their workdays in a cubicle.
4. Turnover Rates are Slowly Dropping
Due to the pandemic, turnover rates hit all-time highs across many industries throughout the world.
Taking a look at the job market over the last few years, turnover rates have been a little shocking, to say the least.
However, turnover rates are slowly dropping, as the average was 57% in 2020 but 47% by 2020.
In the chart below, you’ll find various turnover rates for different industries from 2022.
At a glance, it’s evident that some industries were hit harder than others.
For example, the hospitality industry took a hit from covid as people weren’t traveling for extended periods of time.
Of course, we’re likely to see many of these industries bounce back, but the damage that has been done will be challenging to recover from.
Taking a look at the fine print, you’ll also see specific timeframes between 2020 and 2022 where people were leaving their jobs in droves.
5. Millions of People Quit
While there were many people who were laid off due to Covid, millions of others simply decided to quit for a number of reasons.
Whether it was to look for better opportunities or protect their health, Covid acted as a huge catalyst in the current shift in the job market.
More specifically, looking back on April of 2021, roughly 3.8 million people quit their jobs in that month alone.
It may not seem like it but moves like this hit the job market pretty hard, with many employers scrambling to think of different solutions.
One drastic change we saw during the height of Covid was the rise in remote work opportunities.
The struggle employers have is deciding to remain entirely remote or potentially lose a large chunk of their workforce.
Employees are Demanding More
In the traditional corporate world, things have remained relatively the same for decades.
While many people have simply accepted this fact, Covid brought on a change of heart with millions of people.
From compensation to work/life balance and even company culture, employees are demanding change for the better.
The truth is this poses significant challenges for business owners, as many people would rather not have a job than work at a place they hate.
In many cases, employers have been forced to change company culture, or their workforce will walk right out the door.
6. The Primary Reasons for Employee Turnovers
There’s a long list of reasons that play into employee turnover rates, but two specific reasons generally take the cake.
Compensation is something that most people aren’t too happy with.
Even if employees are paid well, many of them don’t have the luxury of work/life balance.
Both of these points are becoming more important to employees, many of whom are tired of settling for less.
Compensation (35%) and work/life balance (25%) are the main reasons leading to employee turnover.
People are more than happy with hopping to a new job if it pays more and gives them more time flexibility.
With the rise of remote work, many people would rather stay in that position than head back into the office.
This is an issue for many employers, as they have a lot of financial investment in their offices and resources.
Employees don’t seem to care, which means many of these companies will be forced to adapt to a new company culture.
7. Job Hopping to Make More Money
In the modern job market, it isn’t uncommon for people to leave a job for another opportunity that pays more.
Although this concept isn’t necessarily new, employees in today’s world are a lot less lenient about this transition.
Many people won’t hesitate to leave a job immediately for a better role, but this also just adds to the turnover statistics.
Data shows that, on average, workers who leave a position for a better-paying one tend to earn 5.2% more.
Keep in mind this is an average, which means it’s not a guarantee for every circumstance.
However, it does highlight a recipe for success in a competitive and unforgiving job market.
While starting salaries are generally okay, many employees drag that figure out over the course of years, and employees are fed up with it.
8. Organizations Lose Out Every Year
Once again, turnover rates are simply a part of doing business, but many employers are scrambling to keep that number as low as possible.
On average, employers lose 18% of their workforce due to turnovers.
This creates a vicious cycle of losing key employees and having to hire and train new ones.
The corporate world has always been like this, but the recent climate has generated some of the highest turnover rates in history.
It’s important to note that 18% can be broken down into 12% voluntary quits and 6% are layoffs or terminations.
You won’t find a single solution for this, but the only way it’ll improve is if companies start catering to the new trends in the modern job market.
9. The Cost is Hard to Ignore
One factor that’s convincing employers to make a change is the cost associated with high turnover rates.
You might be shocked to learn that in 2022, the overall cost for voluntary employee turnover rose to over $1 trillion.
This is quite substantial, and it isn’t sustainable to face this kind of cost due to turnovers in the long run.
Little details like this show that power dynamics are shifting, and employees aren’t hesitating to make understandable demands.
Years will have to pass before we start to see any real change, but Covid acted as the turning point for millions of workers all over the world.
This is likely for the better, as traditional methods of running a business will soon become very outdated.
You can look at that $1 trillion dollar figure from a different angle to provide a little more context.
Businesses with 100 employees that have an average salary of $50,000 are at risk of accumulating $660,000 to $2.6 million in turnover costs.
Some might argue this is the cost of doing business, but the truth is that many companies can’t take those hits forever.
There’s a lot of convincing data and evidence that suggest the way we see work will change for the foreseeable future.
This will inevitably come with a lot of backlash, but at the end of the day, the modern employee knows they hold the power here.
10. Employee Engagement is Crucial
If employers want to reduce their turnover rates, focusing on employee engagement is a great way to do so.
It isn’t the only factor that matters, but data shows that employees who feel highly engaged at work are 87% less likely to leave.
Simply put, these employees are happy to be at work every day.
This usually means they like their colleagues, superiors, their work, company culture, and general environment.
Some might argue this isn’t difficult to accomplish, but traditional methods of business say otherwise.
We’re also dealing with a significant generational gap in many business owners and their workforce.
Young people are coming out of college to work for people who are 40 or older.
Everyone understands this isn’t necessarily strange, but older generations have a hard time understanding the needs of a young, new workforce.
The job market will never seem perfect, but employees and employers will need to find a middle ground eventually.
Both sides will win and lose along the way, but it’s clear that people are demanding change that improves their quality of life.
Turnover Trends and Predictions
Although the last few years have felt a little turbulent for everyone involved, you can’t help but wonder what the future of the job market will look like.
Even if turnover rates have dropped roughly 10% since 2020, they’re still extremely high, on average.
There’s always enough data to support a variety of trends and predictions in this circumstance, some seeming a little more optimistic than others.
Nevertheless, it’s best to be prepared for what’s to come, as both employees and employers will need to adapt to new norms.
11. Turnover Rates are Still Sporadic
The truth is that the world is still feeling the effects of the pandemic.
It’ll be quite a while before this moment in history feels like it’s behind us for good.
Economically, Covid shook the entire world, and it’ll take years to recover.
This means employers will struggle with managing turnover rates until the job market mellows out a bit.
Many people are trying to rebuild their lives since Covid.
Unfortunately, industry experts believe turnover rates could remain high, especially once Covid comes to some kind of definitive end.
Right now, we’re still dealing with surges with the virus and a rapdily changing workforce.
Even though people do want to work, it can’t be ignored that about 57% of the U.S. workforce feels entirely burnt out.
That phrase gets thrown around a lot in corporate culture, but burnout can drastically affect turnover rates.
The world would probably feel a bit better if Covid never happened, but that’s not our reality.
It acted as a catalyst that’ll change how we work forever, but this transition will take years and cost employers and employees a lot of time and money.
12. Trends in Turnover Data by Industry
To successfully navigate the future, you need to have a decent understanding of what happened in the past.
Looking at turnover rates throughout the years across different industries can provide some insight into where improvements need to be made.
The table below highlights how turnover rates have changed from 2017 to 2021 in several key industries.
|Mining and logging
2020 is a year that speaks for itself, as essentially every industry was dealing with high turnover rates.
From a comprehensive view, it’s evident that many industries are struggling with turnover rates, regardless of the pandemic.
For these numbers to drop significantly, it’ll require drastic changes in how society looks at corporate culture.
Work/life balance is much more important to many people than money, and they won’t hesitate to find a better opportunity, as it’s pretty clear there’s enough to go around.
13. How Can Employers Improve?
This section may not offer a bunch of percentages and statistical data, but it’ll highlight what needs to change in corporate culture for employers to succeed down the road.
It considers more than just better pay and work/life balance.
Here are a few professional recommendations to help reduce turnover rates:
- Work on keeping top performers engaged at work
- Consistently recognize employees and their good work
- Listening to employees’ questions or concerns and acting on them
- Conducting external stay reviews to assess turnover risk in an unbiased environment
These points are mentioned because they’re lacking in most corporate offices.
Employers and corporations spent years working their employees into the ground, and this strategy isn’t working anymore.
The points mentioned above coincide with the needs of the modern employee.
If employers exercised these points on a consistent basis, they would start to see their turnover rates fall.
14. The Main Reasons for Employee Turnover
If employers can gain a clear understanding of why employees quit or burn out, then they’d be able to better address these individual concerns.
There are a lot of issues with the modern corporate environment, and employees are becoming more vocal about what they want out of their jobs.
Here are the top 10 reasons for employee turnovers:
- Lack of purpose at work
- Less than satisfactory compensation
- Feeling overworked
- Poor management from superiors
- No feedback or recognition
- Poor work/life balance
- General boredom
- No room for growth
- Lackluster hiring and training procedures
- Toxic or negative company culture
Looking at these points it makes you wonder why anyone would associate themselves with these qualities.
The unfortunate truth is that these are all pretty common, no matter where you work for the most part.
15. Millions Quit On a Monthly Basis
This isn’t the case for every passing month, but data taken from December of 2022 shows that 4.1 million quit their jobs that month.
There are always a variety of reasons for this, but the corporate world can take losing millions of employees every month.
Enough cause for concern: 4.1 million is enough to catch the attention of employers and potentially influence some positive change.
Industries like transportation, warehousing, and utilities make up most of that number.
These industries historically deal with high turnover rates as working conditions can be brutal sometimes.
Outside of that, the entire experience can wear people down pretty quickly.
This is especially true with warehousing, as it can entail a lot of physical labor.
Nevertheless, it’s another data point that showcases a need for change in modern corporate culture.
There’s no instant fix for the current state of working culture, and employees’ wants and needs will look somewhat different worldwide.
However, the consensus seems to be that people simply want better pay and more flexibility with their time.
Seeing this change will require a slow burn, but Covid was enough of a catalyst to propel this change forward.
This article dove into the average employee turnover rate by industry and many other related statistics that play a part in the big picture of the culture surrounding work.