Turnover isn’t necessarily a bad thing from the worker’s point of view. A worker who transitions from a job paying $18 an hour to a job paying $19 an hour stands to gain $2,080 more in gross annual pay. Even if the worker is idle for two weeks during the transition – thereby losing $1,440 in income – she still will benefit from the change.

Even a worker who changes jobs for the same pay rate may come out ahead. For example, if a man earning $7 an hour quits a job on the far side of town and takes a similar job nearer home for the same pay, he’ll save the cost of transit. He’ll lose at least two days’ pay during the transition, but by saving $3 a day in bus fare he recoups that loss in 38 days.

On the other hand, turnover may be costly to the worker if changing jobs means significant downtime between paychecks, loss of seniority and the sacrifice of any non-portable health or retirement benefits. And too much turnover, needless to say, hurts both a worker’s immediate incomes and his chance of getting a better job. Employers are wary of hiring people with poor work records, and frequent job changes is often a bad sign.

For employers, there is no silver lining in turnover. Except in the case of seasonal employment, employers expect the people they hire to stay on the job for a long time. The employer incurs hiring expenses up front, before the worker even begins to perform. If the worker quits a short time later, the employer loses the investment in the worker and will have to repeat the process again with another new recruit. He bears a variety of added business costs because of turnover in his staff:

• Recruitment efforts
• Testing and screening of applicants
• Administrative costs of enrolling new hires
• Training
• Reduced capacity during short-staffed periods
• Reduced quality of service or reduced productivity
• Overtime paid to remaining staff
• Severance pay.

The combined cost of turnover can be staggering. One estimate of turnover costs for the supermarket industry is $5.8 billion annually, or about $190,000 per store.⁶

6 "Help Wanted! Workforce Issues in the Food System," The Food Policy Institute, www.foodpolicyinstitute.org/docs/facts/labor.pdf, retrieved Aug. 20, 2007.