2 workers leaving for every 3 who are hired

TO »

California bosses

FROM » Columnist with trusty spreadsheet

RE » Your quitting workers

I know it's been a tough few years on the staff retention front. Your workers seem to have forgotten about employer loyalty and switch jobs as quickly as fashions change.

Who knew they'd want better pay and benefits plus the flexibility of working from home, and would leave to get those amenities elsewhere?

Ponder what my spreadsheet found inside the federal government's Job Openings and Labor Turnover survey — dubbed JOLTS by economists.

It seems the quitting fad has cooled. California quits totaled 4.83 million in the 12 months that ended in March — down 6% from 5.13 million who left voluntarily in the previous 12 months.

Yet no reasonable boss should view this quitting chill as a signal that employee loyalty has returned. The history of California quits confirms “goodbye, boss” is still very popular.

California averaged 3.4 million quits a year in the 20012007 boom times. Then it fell 26% to 2.5 million in the 20082014 job market crash surrounding the Great Recession.

Yet quitting on the rise isn't just some pandemic thing. It jumped 50% from the economic bottom to 3.8 million in 20152019 — well before we knew what a coronavirus was.

Big chunk

Think about the quit frenzy another way: its share of all California workers.

As somebody who last changed jobs in 1986, it stuns me that voluntary departures in the 12 months that ended in March were equal to 27% of all California workers.

That's roughly 1 in 4 workers quitting during a year. (By the way: The typical U.S. boss juggled a 33% quit rate in the past year.)

Again note a slowdown: California quitting's share was 29% in the previous 12 months. Still, quits are up from the 22%-ayear pace for in 2001-2007's boom, 17% in 2008-2014's crash and back to 22% in 2015-19.

Yes, boss, there's a subtle underlying trend. Workers quit more in better times when the opportunity is plentiful.

When California had job growth since 2001, quits ran 22% of all workers. When jobs declined, just 19% of workers quit.

Extra work

Boss, let me tell you why you should care: Quitting makes for more work for you.

A growing portion of your hiring efforts is simply replacing those who walked out on you. California quits equaled 66% of all hires in the two years that ended in March.

Yes, two-thirds of California hiring is tied to quitter replacement. (FYI: The national ratio was 63% in the same period.)

And this headache is expanding. Quits were only 52% of California hires in the 2001-2007 boom versus 47% in 2008-2014 job market crash versus 56% in 2015-19.

Less picky

Finally, unlike your worker's newfound fickleness, let me suggest the quitting binge nudged you to be less picky about what workers stayed.

Yes, you let go 3.5 million California workers in the two years that ended in March. That's an annual rate of 10% of all workers.

However, ponder the previous slice of involuntary exits — ahem, layoffs, firings, etc.. These forced departures ran 18% of all workers in the 2001-2007 boom versus 17% in 2008-2014's crash and 13% in 2015-19.

Maybe you're too busy replacing the quitters to have time to let go of others.

Bottom line

Want to fix this? Pay up, boss, to the people you know.

Intriguing national wage data from the Atlanta fed shows a key reason for the quitting upswing: bosses reward disloyalty.

You know pay hikes are fatter these days. In the past two years, workers who stayed — your loyal employees — got raises averaging 4.7% a year.

But you gave new hires — aka quitters — what amounted to a 5.5% salary hike. That's premium pay going to somebody 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 surrounding the 2008-14 jobs crash, loyal workers got only 2.4% raises — but that's barely less than 2.6% for new hires.

Just having a job was the big perk in that era. Then look what happened as the economy firmed up in 2015-19: Bosses began poaching talent.

Loyal workers saw yearly raises of only 3% while pay bumps ran 3.9% for those who quit to join you. And that nearly percentage-point gap continues to 2023.