Ever wonder why employees leave and what your business can do about it? Digging into separation rates (also known as turnover rates) can be pretty revealing.
By looking at why people leave voluntarily, get laid off, or retire, companies can spot patterns and tweak their retention strategies. It’s all about finding out what’s driving people out the door and then coming up with smart ways to keep them in.
Because remember—lower employee separations mean higher business profitability.
Keep reading to learn about the types of employee separation, how rates vary across different states, and how it impacts your business.
Types of Employee Separation and Factors Influencing Them
Before we get into the types of employee separation, we want to be open about where we’re getting our stats:
- Throughout this guide, we highlight several metrics from the Bureau of Labor Statistics (BLS).
- The BLS formally uses “separations” instead of “turnover.” The agency defines separations as any removal of an employee from a company’s payroll, including quits, layoffs, discharges, and retirements.
- The BLS releases an updated Job Openings and Labor Turnover report each month. We encourage you to bookmark the page to stay on top of industry data and news.
Voluntary Separation
Voluntary separation is when an employee voluntarily leaves their job.
Examples of Voluntary Separations
An employee may voluntarily leave their job for reasons such as:
- Career advancement opportunities: An employee may find an opportunity at another company that better aligns with their career interests and aspirations.
- Retirement: While factors like age or financial readiness may influence retirement, it’s ultimately the employee’s choice to retire from their position (usually).
- Low job satisfaction: Someone who is unhappy or unfulfilled in their work may voluntarily leave.
- Organisational culture: The top reason people quit their jobs is a toxic work culture. Culture plays a vital role in how employees interact with one another and, ultimately, the level to which they feel valued.
- Work-life balance: Life isn’t all work—it’s personal, too. Burnout due to an absence of work-life balance prompts many employees to leave.
- Career change: After gaining some experience in a role, a person may discover it isn’t something they foresee themselves pursuing long-term. They may leave their job to try out a new career.
- Lack of recognition and value: An effective recognition and rewards programme can reduce turnover by 31%. When someone feels they are not personally recognised and valued for their efforts, they may look for job opportunities elsewhere.
- Relocation: An employee may also voluntarily leave a job to relocate or for other personal reasons.
- End of contract: For those hired on fixed-term contracts, employment is terminated when the agreed-upon contract expires.
Involuntary Separation
Involuntary separation is when an employee involuntarily leaves their job. The separation is initiated by the employer.
Examples of Involuntary Separations
Involuntary separations might happen for reasons such as:
- Layoffs: A company might need to reduce or restructure its workforce to cut costs and stay afloat.
- Dismissal/firing: An employee could be terminated due to poor performance or violation of company policies.
- Retirement: Sometimes, retirement might happen in a way that feels involuntary. For example, an employer might pressure an older employee to retire early through a forced retirement programme or even discriminatory practises based on age. In these situations, retirement isn’t always straightforward and can have legal implications.
The National Average Employee Separation Rate
Based on BLS data, the average national employee separation rate hovered near 3.5% from February 2023 to February 2024, showing overall stability.
Total Separation Rates by State
In the BLS graphic above, the dark blue states had the highest job separation rates as of February 2024, while the light green ones had the lowest rates.
The states with the most significant separation rate increases between January and February 2024 included:
- Minnesota (+1.3%)
- Maine (+1.0%)
- Alaska (+0.9%)
The states with the most significant decreases included:
- Nebraska (−0.8%)
- New Jersey (−0.6%)
- West Virginia (−0.6%)
Total Quits Rates by State
The BLS also shows the rate of quits, a significant type of voluntary separation, in each state.
The states that experienced the highest quits rate increases from January to February 2024 included:
- Missouri (+0.8%)
- Nevada (+0.7%)
- Alaska (+0.6%)
The largest quits rate decline was seen in West Virginia (−0.6%). The national quits rate remained unchanged (-0.1%).
Total Layoffs and Discharges Rates by State
Additionally, the BLS reports the rate of layoffs and discharges, the main types of involuntary separations.
The states that experienced the highest percentage increases from January to February 2024 included:
- Minnesota (+1.3%)
- Maine (+1.1%)
- Tennessee (+0.7%)
The most significant decrease occurred in New Jersey (−0.4%). The national layoffs and discharges rate remained unchanged (-0.1%).
Again, the BLS releases a new report every month. We encourage you to bookmark the page to stay updated on how these values shift over time.
Why Do Voluntary Separation Rates Vary by State?
There are seven key reasons why voluntary separation rates vary by state:
- Economic conditions: In states where the economy is doing well and jobs are plentiful, folks might be more inclined to depart from their roles. After all, when there are lots of options out there, people tend to feel pretty confident about jumping ship and trying something new.
- Job market dynamics: Changes in job availability, demand for certain skills, and job growth rates entice employees to leave their current jobs and look for better opportunities.
- Industry composition: States with booming or struggling major industries might see changes in how often people leave their jobs. For instance, tech hubs could have higher turnover because of fierce competition for talent, while states dependent on declining industries might see more people searching for other work.
- Cost of living: Differences in the cost of living between states can also impact employees’ willingness to stay in their current jobs. In states with high living costs, employees might be more likely to look for better-paying opportunities elsewhere, which can lead to higher turnover rates.
- Labor market policies: State variations in labor market regulations, such as employment protection laws, non-compete agreements, and employee benefits mandates, can influence employees’ mobility and decision-making around leaving their jobs.
- Cultural factors: Cultural norms and attitudes about job stability, career growth, and work-life balance can differ from region to region. These differences can shape how satisfied employees feel at work and whether they’re likely to look for new job opportunities.
- Quality of life factors: Factors like climate, amenities, housing affordability, and commute times can greatly affect employees’ quality of life and job satisfaction. These elements play a big role in whether people decide to stay at or leave their current jobs.
Why Do Involuntary Separation Rates Vary by State?
Involuntary separation rates also differ from state to state. Here are some reasons why:
- Economic conditions: States with unstable economies or industries that are sensitive to economic ups and downs often see higher rates of involuntary separations. For instance, states that depend heavily on industries like manufacturing or energy might experience changes in these rates due to market demand, global competition, or technological advancements.
- Labor market dynamics: Differences in labor market conditions, like how many people are out of work, how many jobs are available, and how much money people are making, can also affect involuntary separation rates.
- Industry composition: The types of industries in each state can impact involuntary separation rates as well. States with more jobs in industries prone to layoffs, like construction or retail, might see more involuntary separations than states with a larger assortment of industries.
- Labor laws and regulations: Differences in state-level labor laws and regulations, including employment protection laws, worker rights, and unionization rates, can affect how often involuntary separations happen and why. States with stricter regulations around layoffs or firing might have fewer involuntary separations than states with looser regulations.
- Demographic factors: Demographic characteristics like age, education levels, and employment rates can also affect how often involuntary separations happen. States with aging populations or industries with a lot of older workers might see more involuntary separations due to factors like forced retirements or companies cutting back on staff.
- Geographic location: Finally, geographic factors like closeness to big cities, access to good roads or public transportation, and regional economic conditions can affect involuntary separation rates. For example, you might see more involuntary separations in rural areas, where businesses might have a tough time staying profitable or competing with bigger companies.
How Types of Separation Impact Businesses
Each time someone leaves an employer, the replacement process costs at least one-half of that employee’s annual salary.
And the impact of separation on businesses isn’t only financial. Let’s take a moment to break down how voluntary and involuntary separation affects businesses.
1. Financial Implications
Whether it’s the employee’s choice or the company’s, it’s expensive when someone leaves.
- Voluntary: Businesses must account for productivity losses and recruitment and training costs.
- Involuntary: Involuntary separation costs include severance packages and potential legal fees (e.g., wrongful termination claims or compliance with labor laws).
2. Organizational Culture, Morale, and Performance
Not only do your finances take a hit when someone leaves, but your workforce suffers as well.
- Stress and uncertainty: Frequent separations, whether voluntary or involuntary, can create a lot of uncertainty and anxiety among employees.
- Team dynamics: Changes in team members disrupt productivity, workflows, and relationships.
- Output: Frequent turnover impacts output—both quantity- and quality-wise. Research has found a direct link between higher turnover rates and product failure.
3. Knowledge Management and Continuity
When employees leave, they leave with unique knowledge that provides value to the organization.
- Expertise loss: Departing employees often take with them valuable, undocumented knowledge and skills that are difficult to transfer to other individuals.
- Client relationships: Separations can disrupt established customer relationships, potentially leading to a loss of business.
- Innovation and problem-solving: Departures can stifle innovative and problem-solving processes once helmed by former employees.
Leverage Powerful Resources to Improve Employee Retention
There’s always room for improvement when it comes to retention strategies, from employee recognition to investing in employees’ career development. At Awardco, we believe knowledge is power, and we’re here to share it with you.
Let these insights guide you toward bigger and better solutions:
