Employee Turnover Defined

• Turnover comes in two primary forms: voluntary and involuntary. When an employee resigns or quits, this constitutes voluntary turnover. An employee who is fired represents involuntary turnover. Turnover costs the organization a significant amount of money in recruitment and training expenses, in addition to productivity costs while the new employee learns the ropes. Although turnover is generally seen as negative, some involuntary turnover -- such as discharging a poor performer -- helps the employer.
  
  

Economic Factors Resulting in Decreased Turnover

• April 2011 data from the Bureau of Labor Statistics indicates that the average number of employees per month who voluntarily quit their jobs in 2011 is almost a million less than the number who were voluntarily quitting at the end of 2007 when the recession began. The BLS reports that these figures indicate a lack of available alternative work options in general, because of the economy. In a 2009 article titled "Prepare Now Or Lose Your Best Employees Soon," "Forbes" reports that research by Deloitte indicated a positive correlation "between consumer confidence and voluntary turnover" and a negative correlation "between unemployment rates and voluntary turnover rates."
  
  

Economic Factors Resulting in Increased Turnover

• The UC Berkeley Center for Labor Research and Education in an October 2009 report titled "The High Cost of Furloughs," notes that turnover increases if wage reductions are implemented, particularly among highly skilled and productive workers. Sigma Association, in an overview of employee turnover research, reports that one of the most common reasons for leaving a job was the availability of a higher-paying position. In fields that paid minimum wage, leaving a job for one that paid 50 cents more an hour was observed. In a depressed economy, when every cent counts, employers who pay less than the market average may experience increased turnover.
  
  

Primary Causes of Turnover Impacted by the Economy

• Job dissatisfaction, and "shocks" to the employment relationship -- such as another job offer, a spousal relocation, disagreements with co-workers and superiors or dissatisfaction with actions taken at the company -- are the main causes of turnover, according to research published in the journal "Human Resource Management" in 2005. The economy exacerbates these types of shocks -- for example in a booming economy, unexpected job offers to high performers may be abundant, while in a recession, workers may be dissatisfied with the company's approach to layoffs, which in and of themselves are a form of involuntary turnover.