What’s Happening with Voluntary Leave
BLS generates quit rate by calculating the changes observed from the Current Employment Statistics (CES) data and includes only “employees who left voluntarily” separating out retirements and transfers. Based on this calculation and compared to other industries, manufacturing has had more loyal employees in the last decade. The quit rate ranged from 0.9% in 2013 to 1.6% in 2020, which was lower than most industries with a few exceptions — finance dropped below manufacturing in 2017 and information dipped below in 2020. The quit rate was at its highest at 2.4% in 2021 and has since fallen just below 2% for the end of 2023, placing it third among other industries.
Average Quit Rates by Industry
Source: Annual average rates were calculated from BLS Job opening and Labor Turnover Survey, year 2013 to 2023, all sizes class, total US, All areas, Rate.
Diving deeper into the BLS data, we see that not all regions in the United States experienced the same rate of turnover. Overall, the South had the highest level of quits in the past decade, with 919,000 quits (1.9%) in 2013, and 1,654,000 quits (2.9%) in 2023. On the other end of the spectrum is the Northeast, topping in at almost 500,000 quits in 2023. For those manufacturers with facilities spread across the country, regional turnover rates might come into play along with industry. According to IndustrySelect, 2 out of the top 10 states with the most manufacturing jobs are in the South — Texas and North Carolina. The bulk of the list covers states in the Midwest, which is traditionally heavy in manufacturing, and had a quit rate of 2.3% in 2023.
Manufacturing Quit Rates by Region (2023)
Source: Annual average rates were calculated from BLS Job opening and Labor Turnover Survey, total nonfarm, all sizes class, All regions, Rate.
Getting a Handle on Your Metrics and What to Measure
Moving away from BLS data to manufacturing company data, those surveyed broke down turnover statistics further to measure hourly versus salaried workers. While much is written about the unfilled hourly jobs in manufacturing, salaried workers left at higher-than-expected rates in 2023. 61% of respondents saw an average voluntary turnover rate between 5.1 – 10%. While the other groupings of higher and lower voluntary turnover rates did not make it anywhere near that number, it’s clearly far from unnoticeable. Manufacturers who already have a hard time sourcing talent are losing resources, including knowledge loss from long-term employees leaving, and can expect to pay high replacement costs to search and fill the roles.
Tracking salaried and hourly employee turnover is extremely important in manufacturing. “In 2023, our professional roles experienced less the half the turnover as the turnover in our plants,” said Mandy Baeumel, Senior Vice President of People & Culture at Southwire.
And Southwire was not alone with such a defined gap. Our survey found that 78% of member companies reported a voluntary turnover rate of 10.1% or higher for hourly workers. 22% of that group experienced a greater turnover rate than 20.1%, and none of those surveyed saw less than 3.6% of turnover.
Annual Average Voluntary Turnover (Reported by Manufacturers Alliance Members)
Source: Manufacturers Alliance member survey. Responses come from 25 mid-to large Cap manufacturers collected in Q1 of 2024.
Each manufacturer may define quit or voluntary leave differently. In fact, an executive at an industrial manufacturer broke down their attrition rate and developed their own formula to track attrition, factoring in retirements. In the most recent voluntary attrition rate, they noticed nearly half is retirements. Despite their rate to be better than the sector, the long-tenure culture is seeing people slowly retiring, and they are expecting the rate to at least measure at the same pace or increase slightly for the next few years.
One HR executive has introduced a dashboard to calculate turnover and uses their new formula consistent with industry standards. Using set data points their team can distinguishable between the breakdown in voluntary attrition, retirements, resignations, and total attrition rates. Even though the tracking is still new, the manufacturer can collect the data needed to parse out key areas of talent and pivot their people strategy while delivering insights to senior leaders.
Manufacturers Are Managing Turnover
What is contributing to the voluntary turnover rates? More than half of those surveyed reported “competition from other employers in geographical area” as their highest reason of loss and following close behind is “competition from other employers generally.” With more than 600,000 job openings in manufacturing and an overall unemployment rate of 3.7%, it’s an aggressive environment.
At Southwire, predominantly located in the Southeast, keeping talent around when there are similar working opportunities nearby does pose a challenge, such as in the Dallas-Fort Worth, Texas area. The company recently built a new distribution center in an area where Amazon operates a huge distribution hub. Southwire’s Mandy Baeumel stated, “Everybody is pulling in the same talent. It’s not a talent shortage, but they’re going from one employer to another for sometimes $0.10 more an hour.” To set themselves apart, when the total rewards package is similar, Southwire is focusing on the employee experience at work to improve recruitment and retention.
Looking internally, manufacturers that were surveyed said the next three suspected contributing factors impacting employee turnover included:
- Not supported by direct supervisors/management
- Job does not meet expectations
- Lack of opportunities for advancement
This is an area that manufacturers can tackle as opposed to the competition moving in around them.