In today’s competitive business landscape, understanding influential employee retention statistics is crucial for small and medium-sized business owners, HR professionals, and operations managers. Your workforce is the lifeblood of your organization, and retaining top talent is absolutely essential for sustained success.

In this article, our experts at Business2Community delve into turnover rates, reveal strategies to improve retention, and offer industry-specific insights. With these employee retention statistics at your fingertips, you can make informed decisions to foster a motivated and loyal workforce, driving your business forward.

Employee Retention Statistics Highlights

  • In August 2023, there were 9.6 million job openings in the USA.
  • The highest percentage of job layoffs in the 21st Century so far was recorded in March 2020.
  • As of 2023, the US has an average employee turnover rate of 3.8%.
  • 63% of US employees have left their jobs due to low pay and no career growth.
  • Higher levels of employee engagement can lead to a 59% reduction in turnover rates.

The State of Employee Retention in 2024

Employee retention is a dynamic field with its share of contemporary trends and challenges. In 2024, the workforce landscape has evolved rapidly, driven in part by the lasting effects of the global pandemic.

The COVID-19 pandemic significantly disrupted the American labor force, often referred to as The Great Resignation. Employee retention statistics reveal that in 2022, over 50 million employees voluntarily left their positions, with many seeking a better work-life balance, enhanced pay, flexibility, and a positive corporate environment.

What is Employee Retention?

Employee retention refers to an organization’s ability to keep its employees engaged, satisfied, and committed to their jobs and the company over the long term. High retention typically results in low turnover and low retention results in high turnover. These two concepts are interconnected and represent opposite aspects of an organization’s workforce management.

Employee retention is a critical aspect of talent management, as retaining skilled and experienced employees is often more cost-effective and beneficial than hiring and training new ones.

Increased employee engagement leads to:

  • Lower turnover rates
  • Higher productivity
  • Enhanced customer retention
  • Stronger financial well-being
  • Increased employee satisfaction

Job Openings and Employee Retention Statistics

Job openings internally are vital for employee retention, offering career growth and satisfaction, and making employees more likely to stay with their current employer.

The chart below offers valuable insights into the relationship between employee retention and job openings from 2022 to 2023. In March 2022, employee retention reached a historic low due to an unprecedented surge in job openings, surpassing levels not seen since 2001.

Transitioning from Q3 to Q4 in 2022, employee retention improved consistently, coinciding with a gradual decline in job openings during that period. However, December 2022 witnessed a sudden spike in job openings, resulting in another decline in employee retention. Nevertheless, the data for 2023 indicates that the number of job openings has been decreasing at a more consistent rate than in 2022.

fred job openings 2019 to 2023

Job Quits vs Layoffs

An increased rate of job quits can be detrimental to retention efforts, as it indicates dissatisfaction or disengagement among employees. Job layoffs, often driven by economic downturns, can also undermine retention. They create job insecurity and diminish employee loyalty when companies are forced to cut their workforce.

In March 2020, the highest percentage of job layoffs was recorded since 2000, with 8.6% in March 2020 and 7.1% in April 2020.

As demonstrated in the charts below, there was a notably higher rate of job layoffs in 2020. This is because the COVID-19 pandemic triggered widespread economic turmoil and business closures, leading to a surge in involuntary layoffs as companies downsized or ceased operations.

fred layoffs and discharges rate 2019 to 2023

The COVID-19 pandemic brought about widespread uncertainty, safety concerns, and economic instability. It prompted many workers to reassess their employment situations and make the difficult decision to leave their jobs.

The job quitting statistics below reflect the significant impact of the pandemic on the labor market, with employees making major career decisions in response to the challenges and changes brought about by the crisis.

fred job quit statistics 2019 to 2023

Impact of the Pandemic on Employee Retention

The COVID-19 pandemic resulted in the shuttering of businesses and financial setbacks. Subsequently, it caused a rise in both voluntary resignations and involuntary layoffs, sparking one of the most severe employment crises since the Great Depression.

According to the International Labour Organization, in Q1 2021, there was a global decrease of 4.5% in working hours, which is equivalent to 131 million full-time jobs lost. In Q2, this decline increased to 4.8%, equivalent to 140 million full-time jobs, and in Q3, it was 4.7%, or 137 million full-time jobs.

ilo working hour decreases pandemic

The introduction of COVID-19 vaccines had a direct impact on employee retention rates. In a 2021 survey by Kaiser Family Foundation, 25% of workers stated that their employer had required them to get the COVID-19 vaccine. Conversely, 37% of unvaccinated workers said that they would have quit instead of complying with a vaccine or testing mandate.

Vaccine-Mandate-Employee-Retention-Statistics.

Employee retention statistics reveal that within the Organisation for Economic Co-operation and Development (OECD),  job retention schemes implemented globally sustained over 50 million jobs, a figure ten times higher than the support offered during the global financial crisis of 2008-09.

In The US, The Short-Time Compensation (STC) program allowed businesses to reduce employee hours instead of firing them during economic downturns. It provided partial wage replacement to affected employees and was administered at the state level. Eligibility varied by state and the program aimed to stabilize the labor market while preserving employee benefits and skills.

Generational Differences in Employee Retention

Many businesses released a significant number of older workers during the pandemic, resulting in the departure of valuable institutional knowledge, expertise, and long-standing loyalty.

According to a Schwartz Centre Economic Policy Analysis, in March 2020, 35 million older workers were employed. However, the following month, around 3.8 million individuals aged 55 to 74 lost their jobs. Notably, the retirement rate stayed steady, with only 2% of workers opting for retirement, mirroring the pre-pandemic trend.

Individuals who retired from a state of unemployment did not do so voluntarily. In fact, the pandemic saw a slight decrease in the number of retirees who had been employed one year before, indicating that older workers were more inclined to delay retirement if they could retain their jobs during this period.

Retirement-Unemployment.

The number of retirees returning to work remained the same or lower in 2021 than it was before the pandemic.

Retirement-to-Employment-Rate

The relatively low wage growth amongst older workers hints at a potential labor demand issue causing the low return rates to the job market. Young and mid-career workers have experienced significant wage growth above pre-pandemic levels:

February 2020 February 2022
Young Workers 8.3% 3.9%
Mid-career Workers 11.4% 4.4%

Older workers on the other hand have not surpassed their pre-pandemic peak of 2.6%. These modest wage increases indicate that the choice to remain in retirement may not necessarily reflect retirees’ preferences but rather a limited demand for their skills and experience.

Remote Work and Employee Retention Statistics

Remote work has had a significant impact on employee retention. In fact, remote work has shown to have a direct positive correlation with employee happiness.

As per research conducted by Tracking Happiness, the option to work remotely can elevate employee happiness by up to 20%. Furthermore, the study revealed:

  • Millennials are the happiest when they work remotely
  • The shift from remote work to office-based work post-pandemic has led to a decline in employee happiness
  • Longer commute times decrease employee happiness
  • Workplace happiness leads to overall life satisfaction

Remote Work Employee Retention

A report by Owl Labs revealed that in 2022, there was a 24% increase in the number of workers opting for remote work compared to 2021. 

Furthermore, a significant portion of the workforce highly values the flexibility of remote work. Specifically:

  • 66% of workers would seek another job if remote work was no longer an option.
  • 39% would consider quitting their current job if remote work was no longer an option.

The survey also revealed that remote workers are open to accepting a pay cut in exchange for the opportunity to work from home. In detail:

  • 52% would accept a pay cut of 5% or more
  • 23% would be open to a pay reduction of 10% or more

If employees were no longer provided remote or hybrid work arrangements, 67% would expect a pay increase to make up for the additional costs. Additionally, surveyed respondents stated that:

  • 46% would opt for a “quiet quitting”, meaning that they would remain in their current roles but with reduced engagement.
  • 45% would remain at their current job but would be less happy.

Remote work promotes greater independence and heightened focus among workers. 69% of hybrid workers, report increased productivity due to the freedom of working independently. Furthermore, 54% reported that they concentrate more effectively when working remotely as opposed to being in the office.

Millennials are the leading generation in favor of remote work, with 44% expressing a preference for this working style, while only 19% favor working from the office. The survey findings also indicated that older generations, such as Gen X and Baby Boomers, exhibit a preference for office-based work environments.

In contrast, younger generations like Gen Z and Millennials place a higher value on remote work opportunities.

Employee Turnover Statistics

As a result of the pandemic, the macro employee turnover rate saw an uptick, primarily driven by involuntary employee turnover, which is when employees are let go from their jobs.

As of 2023, the US has an average employee turnover rate of 3.8%.  Approximately 2.5% of this turnover was due to resignations, while roughly 1% resulted from layoffs and terminations.

According to a survey by Gallup, 1 in 2 US employees was open to quitting their jobs in August 2023.  Furthermore, 49% of workers were actively seeking different employment opportunities than their current positions.

Definition and Calculation of Employee Turnover

Employee turnover rate is a key indicator of employee retention and the stability of your workforce.

It is a metric that measures the number of employees who leave your company during a specific period and is typically expressed as a percentage of the total workforce. To calculate the employee turnover rate:

Turnover = (Employees who left ÷ Average number of employees) x 100

National Turnover Rate

Based on findings in the SHRM Benchmarking Human Capital Report, the average annual employee turnover rate in the US, which considers both voluntary and involuntary departures, was 30% in 2022.

  • 23% of employees left voluntarily
  • 11% of employees left involuntarily

Organizations often use the national turnover rate as a benchmark to compare their own turnover rates against industry or regional averages. This comparison can help you assess your retention efforts and make necessary adjustments.

Common Reasons for Employee Turnover

According to a 2021 survey by People Element, employees pinpointed these factors as the primary drivers of job dissatisfaction:

  • 41% of respondents weren’t happy with their pay, feeling it wasn’t fair compared to coworkers in similar roles.
  • 36% of respondents didn’t feel heard within the organization.

Leadership’s lowest scores were related to listening and caring about employee concerns:

  • 35% of respondents were dissatisfied with leadership resolving organizational issues.
  • 35% of respondents didn’t feel valued by their leaders.
  • 35% of respondents were concerned about communication.

These survey findings underscore the critical importance of addressing employee concerns related to compensation, communication, leadership, and workplace value. Understanding and addressing these factors can be key to enhancing job satisfaction and retention.

Employee Compensation and Retention

Study findings from the Pew Research Center confirmed that more than 50% of Americans who voluntarily left their jobs in 2021 cited low pay, no career growth, and workplace disrespect as the primary reasons to quit. 

In 2021, 63% of Americans left their jobs due to inadequate pay and a lack of opportunities for career advancement.

Reasons-for-Employees-Quiting

 

Higher pay is among the leading factors that people seek in their next job. In Gallup’s 2023 Employee Retention & Attraction survey, the “Pay/Benefits” category emerged as the leading reason for job departures. However, this factor was only present in 20% of cases.

This underscores the importance for organizations to shift their focus towards addressing a broader spectrum of employee needs in order to prevent the remaining 80% of employee turnover.

Reasons-for-Leaving-A-Job

An additional Gallup workplace report found that employees who were actively engaged in their current roles typically demanded a 31% pay increase to contemplate switching to a different organization. Conversely, those who were not engaged or were actively disengaged tended to seek an average pay increase of 22% to consider changing jobs.

These findings emphasize the strong connection between employee engagement and compensation in the context of job changes.

Organizations that prioritize and maintain high levels of employee engagement often benefit from reduced turnover rates and lower financial incentives required to retain their workforce. Moreover, 28% of survey participants agreed that improvements in pay and benefits would be instrumental in making their workplace a more favorable and desirable environment.

Career Development and Retention

As job seekers observe an abundance of work opportunities, the likelihood of them considering alternative employment options increases. This heightened competition for job positions often results in more attractive job offers and active recruitment efforts.

Employees who quit their jobs in 2021, and secured new employment in 2022 generally considered their new work environment as an improvement. Specifically:

  • 56% were making more money
  • 53% had better chances for career development
  • 53% found it easier to balance work and family
  • 50% had more flexibility in setting their work hours compared to their previous job

Workplace Stress and Retention

Employee retention can be significantly impacted by workplace stress, as it often leads to decreased job satisfaction and increased turnover rates.

A 2023 Work in America Survey conducted by the American Psychological Association (APA) reaffirmed that employees themselves place a strong emphasis on psychological well-being. In detail:

  • 92% value working for an organization that prioritizes their emotional and psychological well-being.
  • 92% appreciate an organization that offers support for employee mental health.
  • 95% emphasize feeling respected at work.
  • 95% prefer working for an organization that understands work-life boundaries.

Moreover, 57% of workers reported facing negative consequences due to work-related stress. Survey participants collectively agreed that the following factors contributed to workplace stress:

  • Emotional exhaustion (31%)
  • Not feeling motivated to do their very best (26%)
  • A desire to keep to themselves (25%)
  • A desire to quit (23%)
  • Lower productivity (20%)
  • Irritability or anger with coworkers and customers (19%)
  • Feelings of being ineffective (18%)

How to Improve Employee Retention

According to a BambooHR survey involving more than 1,000 HR professionals and business leaders, 47% of organizations are struggling to retain their top talent. 

To combat high turnover rates and recover from The Great Resignation, investing in retention is crucial. However, only 37% are actively making substantial investments in employee retention. Among those who allocate even minimal resources to employee retention, the most common investment, at 48%, is providing personal development opportunities.

Invest-in-Employee-Retention

1. Prioritize Employee Engagement

Based on a 2022 People Element survey conducted amongst thousands of US-based employees across various industries, higher levels of employee engagement can lead to a 59% reduction in turnover rates.

Implementing effective strategies to enhance communication and employee participation will lead to increased engagement and a more contented workforce. For example, gathering employee feedback can offer valuable insights to enhance employee engagement within an organization.

Only 36% of companies always use the responses from employee satisfaction surveys to bring about changes across the whole business. meaning employees are being asked for their input but not seeing effective changes around them. Neglecting employee feedback can lead to disengagement and job dissatisfaction, making employees more likely to leave.

Over 60% of departing employees engaged in discussions with someone about their intention to leave before making the decision to quit their last job. These conversations reveal the significance of employee-manager communication. In fact, 52% of voluntarily departing employees believe that their manager or company could have prevented them from leaving their jobs.

Preventing Employee-Retention-Exits

In fact, 49% of employees did not engage in any meaningful coaching conversations with their managers before their departure.

Leadership-Communication-Employee-Retention

2. Career Development Opportunities

Gallup’s estimation puts the annual cost of voluntary turnover for US organizations at $1.1 trillion. Implementing career growth opportunities can serve as a strategic approach to mitigate these substantial costs.

It’s no secret that offering greater career opportunities to employees boost employee retention but some employers downplay its importance and suffer the consequences of high turnover.

The strong emphasis on continuous career-related skills development, as indicated by 96% of respondents in The Conference Board’s 2022 survey, aligns with the idea that fostering professional growth and skill enhancement within the workplace can be a valuable strategy to improve employee retention.

Professional development strategies can increase employee retention by 75%, as per a 2023 HR research report by Betterworks. 3 out of 4 employees would prefer to advance within their current company, which underscores the strong link between internal career opportunities and employee retention.

Additionally, over 50% of employees in 2023 did not perceive a clear route for career progression within their place of employment.

The absence of opportunities for career advancement and professional development ranked as the second and third most common reasons why employees consider seeking employment elsewhere. Betterwork’s report also revealed that:

  • 38% of respondents believe their employer offers full support for their performance and career aspirations.
  • 16% of employees expressed that their managers acted as obstacles to their career advancement.

According to a LinkedIn survey conducted in 2022, 59% of nearly 20,000 participants identified professional development as a leading area for investment to enhance company culture.

The survey’s results underscore the importance of professional development in shaping a positive company culture. It suggests that organizations that prioritize and invest in their employees’ professional growth are likely to benefit from a more engaged, satisfied, and productive workforce.

A positive and growth-oriented work environment can retain employees who value ongoing learning and career advancement, which can ultimately lead to improved employee retention rates. In further detail:

  • 70% of workers are interested in developing their work-related skills to expand their personal growth and development.
  • 60% of workers want to develop their skills to perform at a higher level in their current roles.

3. Provide Flexible Working

When employees are content with the time and location flexibility provided by their companies, they are 2.1 times more inclined to recommend working for the organization, according to LinkedIn data. In fact, flexibility can boost employee retention because it increases employee happiness by 85%.

In Owl Lab’s 2022 survey, workers expressed that having flexibility, such as the option to work from home, had a significant impact on their happiness, therefore affecting employee retention:

  • 85% believed flexibility would help achieve a better work-life balance.
  • 81% thought flexibility would lower their stress levels.

The impact of flexible work on individuals and organizations is also evident in a 2022 study conducted by Atlassian involving 1,710 knowledge workers in Australia and the US.

85% of respondents with flexibility reported a positive effect on their outlook regarding their organization’s culture, whereas only 47% of those without flexibility shared the same sentiment. Flexibility in work arrangements not only enhances the overall perception of the company culture but also boosts employee morale and job satisfaction, ultimately leading to better employee retention.

The presence of flexibility can also reduce burnout symptoms by 22%. When individuals have flexibility, only 14% report burnout symptoms, whereas 36% of those without flexibility experience such symptoms.

Employee Retention Statistics by Industry

Healthcare Industry Employee Retention

The healthcare sector often experiences high turnover due to factors such as burnout, long working hours, and stressful work environments. For example, in 2023, the hospital employee turnover rate in the United States stood at 22.7%.

Meanwhile, the registered nurse (RN) turnover rate stood at 22.5%. Among RNs, those working in surgical services, pediatrics, and women’s health departments reported the lowest turnover rates, whereas nurses in telemetry, step-down units, and medical/surgical services faced the highest turnover rates.

Turnover costs can greatly impact hospital finances and need effective management. Recruiting a physician can cost between $250,000 to nearly $1 million depending on their area of expertise.

For example, recruiting and onboarding a replacement physician for someone generating $1.4 million in annual revenue can cost an organization around $630,000 if the process takes four months.

Meanwhile, replacing a bedside RN can cost around $52,350.

This leads to hospitals losing between $6.6 million and $10.5 million per year. Each one percent change in RN turnover represents an extra cost or saving of about $380,600 annually for the average hospital.

Healthcare-Employee-Retention

According to AMN’s 2022 Healthcare Trends Survey, retaining healthcare executives can be challenging, with 46% of these leaders planning to change jobs within a year.

Data from the Association of American Medical Colleges suggests that by 2034, the US could face a shortage of physicians, ranging from 37,800 to 124,000 people, in both primary and specialty care.

As per St. George’s University School of Medicine researchers, doctor shortages result from rising life expectancy and the growing healthcare needs of an aging population. This also implies that an increasing proportion of active physicians are approaching retirement age. The average age of a physician was 53.2 years in 2021.

In 2021, US nursing schools had to decline 91,938 qualified applications for baccalaureate and graduate nursing programs. The main reasons were a shortage of faculty, clinical sites, classroom space, preceptors, and budget constraints.

Furthermore, an additional challenge stems from the fact that the median age of registered nurses (RNs) is 46 years, with over 25% of RNs anticipated to retire in the coming five years.

In a 2022 COVID-19 Impact Assessment Survey by The American Nurses Foundation and the American Nurses Association, 52% of nurses considered leaving their roles due to various issues, including:

  • Inadequate staffing
  • Work negatively impacting their health and well-being
  • Challenges in providing quality care

Nurses-Burnout

Government Sector Employee Retention Statistics

Public sector jobs, like those in government agencies, tend to have more stable employment and lower turnover. According to a global LinkedIn survey conducted in 2022, government organizations had the lowest turnover rate, at just 8.4%, in contrast to the overall average of 10.6%.

This means that the average industry retention rate for 2022 was approximately 89.4%.

Low-Turnover-Industries

According to the US Bureau of Labor Statistics in 2022, the government sector experienced a job opening rate of 4.5%, significantly lower than the overall average rate of 6.8%. The state and local education area of government had the lowest job opening rate among all industries, at just 3.1%.

This could potentially be attributed to the stability and benefits often associated with government positions, making them more attractive for long-term employment.

Government employees often face salary disparities compared to their private-sector counterparts, which can make it challenging to attract and retain top talent. They have fixed, step-based salaries with minimal room for negotiation or bonuses.

For example, in 2022, government program employees earned an annual mean wage of $50,020, which was approximately $11,880 less than the annual mean wage for occupations across all industries, calculated to be $61,900.

Additionally, government organizations may have limited opportunities for career advancement or promotion, leading to employee frustration and a lack of motivation to stay.

Leisure and Hospitality Employee Retention Statistics

In 2022, the leisure and hospitality industry had a job opening rate of 9.2%. Within this industry, the accommodation and food services sector had the highest job openings rate, surpassing all other industries, at 9.5%.

It is important for businesses in this sector to address employee retention issues within the hospitality industry to reduce the frequency of job openings and maintain a stable and experienced workforce.

The State of Global Hospitality Report by Lightspeed revealed that after inflation, the second and third most significant challenges reported by survey respondents in 2022 were the recruitment of new staff (23%) and the retention of existing staff (11%).

Businesses from various sectors of the hospitality industry in the US  are currently working with less staff than they need. This challenge is particularly pronounced in the following segments:

Hospitality Segment Percentage of Businesses Operating Below Headcount 
Multi-location businesses 67%
Fine-dining 63%
Upscale casual restaurants 61%
Bars/Pubs 58%
Cafe/bakeries 38%
Fast-casual restaurants 36%
Hotels 20%

Many employees in this industry receive low wages and limited benefits, making it less attractive for long-term career prospects. In response to this concern, employers participating in the same survey affirmed their strategy of raising wages and enhancing benefits as a means to both attract and retain staff.

Hospitality Sector Percentage of Businesses Increasing Salaries and Benefits 
Multi-location businesses 44%
Fine-dining 44%
Upscale casual restaurants 22%
Bars/Pubs 25%
Cafe/bakeries 19%
Fast-casual restaurants 35%
Hotels 40%

The hospitality industry struggles with one of the highest burnout rates among all sectors. Estimates suggest that approximately one in seven hotel and restaurant employees experience employee burnout.

Recognizing this concerning reality, some businesses have proactively addressed the issue by strategically reducing their operating hours. This measure not only mitigates staff burnout but also reinforces their commitment to improving employee retention.

The Future of Employee Retention

The employee retention statistics presented in this article shed light on the dynamic landscape of today’s workforce.

As businesses continue to navigate the challenges of retaining talent, it is evident that employee satisfaction and well-being are central to this equation.

Employers who prioritize the needs and aspirations of their workforce, backed by data-driven insights, stand to benefit from improved retention rates and a more engaged, loyal, and productive team.

FAQs

What is the average industry retention rate?

Which company has the highest employee retention rate?

What is the employee turnover rate in 2023?