TO: california chiefs
Of: Trusted Spreadsheet Columnist
Re: Your workers who leave
I know it’s been a tough few years when it comes to staff retention. Its workers seem to have forgotten their loyalty to the employer and change jobs as fast as fashion changes.
Who knew that employees would want better wages and benefits, plus the flexibility of working from home, and would leave for those conveniences elsewhere?
Reflect on what my spreadsheet found inside the federal government’s Job Vacancy and Job Turnover Survey, dubbed “JOLTS” by economists, which tracks what’s moving in the job market.
It seems that the fad for quitting smoking has cooled off lately. California resignations totaled 4.83 million in the 12 months ending in March, down 6% from the 5.13 million who left voluntarily in the previous 12 months.
However, no reasonable boss should see this shudder at quitting as a sign that employee loyalty has returned. The history of California resignations confirms that saying “bye, boss” is still very popular.
California averaged 3.4 million resignations a year in the boom times of 2001-2007. It then fell 26% to 2.5 million in the 2008-2014 job market crash around the Great Recession.
However, smoking cessation on the rise is not just a pandemic thing. It jumped 50% from the bottom line to 3.8 million in 2015-2019, long before we knew what a coronavirus was.
Think of the smoking-quit frenzy in another way: It’s part of every California worker.
As someone who last changed jobs in 1986, it amazes me that voluntary departures in the 12 months ending in March were equivalent to 27% of all California workers.
That’s about one in four workers who quit during a year. (By the way: the typical US boss juggled a 33% quit rate last year.)
Again, note a slowdown: California’s resignation ratio was 29% in the prior 12 months. Still, dropouts have risen from 22% a year in the 2001-2007 boom, 17% in the 2008-2014 bust, and 22% in 2015-19.
Yes, boss, there’s a subtle underlying trend. Workers quit more in better times when opportunities abound.
When California had job growth since 2001, resignations accounted for 22% of all workers. When jobs declined, only 19% of workers quit.
Boss, let me tell you why you should care: Quitting gives you more work.
An increasing part of your hiring efforts is simply replacing those who have left you. California resignations equaled 66% of all hires in the two years ending in March.
Yes, two-thirds of California hires are tied to replacing leavers. (FYI: The national share was 63% in the same period.)
And this headache is spreading. Resignations were just 52% of California hires in the 2001-2007 boom vs. 47% in the 2008-2014 job market slump vs. 56% in 2015-19.
Finally, in contrast to your worker’s newfound fickleness, let me suggest that the quitting binge pushed you to be less demanding of the workers who stayed.
Yes, it laid off 3.5 million California workers in the two years ending in March. That’s an annual rate of 10% for all workers.
However, consider the earlier portion of involuntary departures: ahem, layoffs, layoffs, etc. These forced departures accounted for 18% of all workers in the 2001-2007 boom versus 17% in the 2008-2014 bust and 13% in 2015-19. .
Perhaps you are too busy replacing those who give up to have time to let the others go?
Do you want to fix this? Pay, boss, the people you know.
Intriguing national wage data from the Atlanta Fed shows a key reason for the resignation spike: bosses reward disloyalty.
You know the pay raises are fatter these days. Over the past two years, the workers who stayed on (his loyal employees) earned average raises of 4.7% a year.
But it gave new hires, also known as quitters, what was equivalent to a 5.5% pay increase. That’s your premium payment going to someone else’s workers!
Remember, the boss-friendly days more or less ended with the Great Recession.
Even in the 2001-07 boom, loyal workers got 3.8% annual raises, not much more than 4.2% for new hires. Then, around the 2008-14 job crash, loyal workers only got 2.4% raises, but that’s just under 2.6% for new hires.
The simple fact of having a job was the great advantage at that time. Then look at what happened when the economy firmed up in 2015-19: Bosses started stealing talent.
Loyal workers saw annual increases of just 3%, while pay increases were 3.9% for those who quit to join you. And that gap of almost percentage points continues through 2023.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]