By Bethia Burke and Ashley Orr
Two years ago, as millions of people quit their jobs month after month, everyone was asking the same question: “Where are the workers?” In Northeast Ohio, a region that represents the 15th largest market in the country, several groups came together to answer this question—and the resulting insights suggest employers have an opportunity to reimagine talent strategies to better serve today’s workforce.
Input from 5,000 residents and more than 600 employers produced a mountain of data relaying attitudes, experiences, preferences and barriers related to work and life during the early years of the pandemic—everything from who retired early and how people felt about vaccine mandates to where people look for jobs and who’s left holding the bag when schools and daycares shut down (it’s women, of course.)
More recently, through the doctoral research of Carnegie Mellon University PhD. candidate Ashley Orr, we exposed some definitive links between how people feel about particular aspects of work and their intentions to stay put or seek opportunities elsewhere.
While recent economic shifts have cooled down the quit rates, these facts hold true: Lots of people are new to their jobs (one in three in 2022), worker shortages have sustained in many industries, and worker churn costs businesses money.
The good news is that employers don’t have to wait for an exit interview to explore reasons people are leaving—the data we collected can inform strategies to improve retention and strengthen their workplaces.
Overall job satisfaction is the leading indicator of whether someone plans to stay in their current role. Higher job satisfaction increases the odds of a person staying by more than 126%. Other key determinants across demographic and industry segments include access to remote/hybrid work in roles that can accommodate it increases retention odds by 42%, and workers who feel they are paid appropriately for what they do are 21% more likely to stay.
Translated to a company, here’s how these odds play out: A typical 50-person firm could expect to lose 10 people over the course of a year, according to our data. But a firm with relatively high worker satisfaction where employees feel appropriately paid and have access to remote work would outperform this competition and expect to lose only two people a year.
While the estimated cost of turnover varies widely across sources and roles, Gallup suggests a salaried employee making $50,000 a year costs between $25,000 and $100,000 to replace, when accounting for the costs of recruiting, training and lost productivity. Retaining eight workers in this example could save a business between $200,000 and $800,000 annually.
If satisfaction, pay, and flexible work environments can save money and improve retention, which work factors cost employers the most employees? Work demands interfering with home and life responsibilities and increased stress at work in the wake of the pandemic are most closely linked with workers’ plans to quit, regardless of their demographics.
Workers who say that the demands of their jobs interfere with their lives are 30% more likely to be planning to quit, and those who reported an increasingly stressful work environment are 13% more likely. In a 50-person organization where employees feel these dual pressures, 13 workers would be planning to leave within a year—three more than the average of 10, or an additional $75,000 – $300,000 in added annual turnover costs, using Gallup’s estimate.
The study also found meaningful relationships between factors beyond work conditions and an employee’s likelihood to stay or quit, emphasizing the importance of differentiated retention strategies and the need for employers to seek worker input in decision-making.
Retention is more likely for workers who expressed an appetite for training and development opportunities (not the availability of those opportunities, it’s important to note, just the desire for more training).
Longer tenure at an organization, longer tenure in the workforce, and status as a permanent employee rather than a contract worker are also linked to greater retention odds, while early-career workers and part-time workers are more likely to be planning to quit.
So, are people with a second income source. One in five Northeast Ohio adults, regardless of employment status, is working a side hustle. Most started after 2020, and members of Gen Z participate in nontraditional work at twice the overall rate. Gig work will continue to influence how people connect to traditional work in ways we don’t yet know, as this survey is among the only sources of data on the gig economy post-pandemic to date.
Finally, while only one in four people felt financially secure enough to leave their jobs if they wanted, those who did were, perhaps unsurprisingly, more likely to be planning to quit.
WHAT TO DO
While this research underscores the notion that pay really matters to people when they take a job, effective retention depends on employers seeking and acting upon meaningful input from their workers to support satisfaction and mitigate stress. Today’s workers have a lower tolerance for sustained interference with their free time and family time, and they place a high value on the flexibility that remote and hybrid work options provide.
Employers have work to do to remain competitive and respond to the market demands of today’s workers. But policymakers, workforce development programs, and philanthropy can also respond to this data and help work evolve.
The lack of comprehensive social infrastructure supporting childcare, education, and training, healthcare and transportation widens disparities and keeps people who want to work disconnected from good-paying, high-demand jobs—is artificially shrinking the available workforce and suppressing our collective potential.
Bethia Burke is president of the Fund for Our Economic Future, the nonprofit that led this collaborative analysis of Northeast Ohio’s workforce.
Ashley Orr is a PhD. candidate and National Science Foundation Graduate Research Fellowship Program (NSF GRFP) Fellow in the Heinz College at Carnegie Mellon University focusing on labor economics, urban economics, inequality and poverty studies, public policy, development economics, and econometrics.
This material is based upon work supported by the National Science Foundation Graduate Research Fellowship Program under Grant No. DGE1745016. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation.