In April 2021, a record 3.8 million Americans quit their jobs. That was the highest "quit rate" ever recorded by the Bureau of Labor Statistics since it started tracking "voluntary quits" in December 2000.
All of that employee turnover costs U.S. businesses a lot of money — $1 trillion, according to Gallup Workplace. The Society for Human Resource Management says that the total cost of replacing a single lost worker equals a third of the quitter's annual salary. So, if a worker making $100,000 a year quits, it will cost the company an average of $33,000 in reduced productivity, lost knowledge, recruiting, hiring temp workers and more.
Why are so many people saying "take this job and shove it"? For starters, the U.S. economy is experiencing one of the tightest labor markets in decades, and recruiters are offering higher pay and benefits to poach top talent from competitors. But does that explain why the quit rate has been steadily climbing across all industries for the past decade?
Dick Finnegan thinks there's a deeper problem that's driving employee turnover. Finnegan is the CEO of C-Suite Analytics, a consulting and coaching firm that helps employers improve worker retention and engagement. Finnegan works with large, Fortune 500 companies and small nonprofits and sees the same issues across the board.
"The number of employee quits has never been higher," says Finnegan. "When companies eventually find and hire new workers, the turnover is really high in the first 60 days. So they're in a 'doom loop' where they keep bringing people in and losing people, bringing people in and losing people."
While some of these workers are leaving for higher pay and better benefits, Finnegan says that the biggest reason why people quit isn't monetary.
"The number one reason employees stay or leave, or engage or disengage, is how much they trust their boss," says Finnegan. "The good news is that it doesn't cost you any money to fix this problem, but it does require you to choose and develop your supervisors in ways that can build that trust."