At a glance, the US economy and job market have been recovering more strongly than in many other developed countries. With an unemployment rate of between 3.4 – 3.7% for the year 2023, so far, as well as an inflation rate of 3.18%, which is lower than the long-term average, these stats paint a picture of a population at work, with prices they’re able to manage. However, that does not tell the whole story, as many businesses are experiencing.
The average turnover rate in America is 47%. This means that nearly half of all employees leave their jobs in a year. It’s not a case of firing, either. 70% of all US employee turnover is voluntary. This is double the rate of voluntary turnover since 2011.
The nature of the retention crisis
It’s clear that there is a major problem with businesses being unable to retain their employees, even more than they want. Not only is this evident from the fact that the retention rate is skyrocketing, but one also needs to look at the nature of those who are quitting their jobs and what it says about the market. For instance, 36% of all employees who leave their jobs do not have a job lined up when they do. As such, many are willing to tolerate some degree of perceived insecurity in order to leave their job. This may, in part, be due to the lower-than-usual unemployment rate, signaling that there are, indeed, jobs to be found, so quitting doesn’t seem as risky as it usually might.
The COVID shot
One of the major catalysts of this increased rate of employee turnover has to be the effects of COVID-19 on the workplace. Business assurance and confidence plummeted during the height of the lockdowns during the first wave of COVID, and it seems that this played a major role in how employees looked at their position, as well. For one, a lot of people were forced to quit their jobs because they weren’t willing to travel and work close to others during a lockdown, and businesses could not keep as many positions open during that lockdown, either. However, it can be agreed that, in general, job dissatisfaction rose greatly under the increased stress that COVID-19 brought to the workplace.
Dissatisfaction: a rising trend
The COVID-19 virus seemed to play an accelerating role in the development and growth of many trends that were already well on their way to dominating the workplace discourse. The aforementioned dissatisfaction that a lot of employees feel is one such trend. According to a poll by Gallup, workers have been experiencing higher rates of dissatisfaction, disengagement, and unhappiness than ever before, with 60% of people feeling detached from their work. While the trope of workers being unhappy in their jobs is a long-held one, these are borne through by the stats, with only 33% feeling engaged, an ongoing drop from 2020, which is when COVID-19 disenfranchisement was at its highest levels. The increasing churn rate of employees goes along with this trend almost perfectly.
The remote question
Another trend that was accelerated by the impact of the pandemic was the sheer amount of remote workers that took to the home office as a result of COVID. It’s estimated that as many as 27%-50% of all workers in 2022 have been working remotely. However, there has been an increasing push from the heads of industry to get workers back into the office, into traditional in-office roles. Given that much of the impetus for this pushback to the office is conflicting with stats that show that remote workers are just as productive, if not more so, than in-office workers, and worker skepticism at the motivation of employers, primarily that the pushback to the office is related to return on property rent than worker wellbeing or performance, is driving dissatisfaction.
The pay crisis
Wage stagnation is the elephant in the room when talking about why it’s hard to keep a hold of employees. On average, the real rate of pay has decreased 3% over the past 40 years, despite the fact that productivity has continued to skyrocket. Jobs are worth a lot less to workers nowadays, given that there are so many of them, and most of them are not paying as well as they should.
Methods to control the retention rate
Of course, there have been some attempts to stop the retention rate from free-falling. The costs of having to continually hire, rehire, and onboard new employees are proving a drain for even the larger corporations that can hire relatively unskilled workers with ease. Addressing the issues mentioned above, paying the going rate ensuring that employees are able to stay afloat against inflation, and allowing for more remote and hybrid working opportunities are showing some success for some businesses. Not all of the efforts to improve retention are coming from businesses, however. The Employee Retention Tax Credit has been a form of direct relief from the state, with the ERC application allowing employers to get some financial aid that can help them keep positions open that have been compromised due to the COVID-19 pandemic. However, just as many of the issues above have been going well beyond the pandemic that exacerbated them, employers need to look to long-term solutions, as well.
The consequences of the retention crisisWorkplace retention continues to be a major issue that employers need to take a more serious look at. The rate shows no sign of stopping its growth and is very likely to lead to a skill shortage in even more job markets if allowed to go on. The lack of perceived job stability is already leading to skill shortages in fields such as truck driving, which have traditionally been among the common job options for men with no further than a high school education. This skill shortage will be felt in other industries as companies fail to hold onto employees long enough to give them the training and experience that they need.