NCPA - National Center for Policy Analysis


December 16, 2004

Employees who voluntarily quit or retire cost companies over $13,000 per worker to replace, according to the Employment Policy Foundation (EPF).

Turnover costs, which include recruiting, selecting and training replacement workers, as well as lost productivity while a position is vacant, have risen 6.8 percent since 2002.


  • The leisure and hospitality industry had the highest turnover rate of 46.4 percent during the twelve months ending August 2004; however, they also had the lowest average turnover costs, at $6,495 per worker.
  • The information industry has the highest turnover cost, at $18,615 per worker.
  • The transportation sector and retail trade experienced the highest retirement rates during that time period, at 3.6 percent and 3.0 percent, respectively, while the retail trade had the lowest retirement rate at 2.2 percent.
  • Large companies, with more than 40,000 employees, can incur costs of up to $80 million annually with a turnover rate of just 15 percent; costs can reach $214 annually with a turnover rate of 40 percent.

During the twelve months ending August 2004, 27.8 million people were hired to replace workers who retired or voluntarily quit.

EPF president Ed Potter explains that "the importance of programs that encourage employee job satisfaction is clear," and can improve a company's bottom line through reduced turnover rates.

Source: Mike Chittenden, "Employee Turnover is Expensive," and Fact Sheet, "Turnover Costs," Employment Policy Foundation, October 22, 2004.


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