The Great Attrition is drastically different from previous workforce shifts both in magnitude and in nature. Voluntary attrition has been on the rise for the past decade, accounting for an average of 54.6 percent of total “separations,” according to the U.S. Bureau of Labor Statistics. However, 2021 saw this number spike to 67 percent—the highest rate in the past decade.
Today, many people are quitting for different reasons than they did historically, and organizations are on high alert. For many employees who are disillusioned, grieving, or burnt out, the prospect of muscling through doesn’t feel sustainable—no matter the increase in compensation. People are taking stock of their lives and are more likely than ever to change their career trajectory in notable ways.
Another distinctive characteristic of today’s attrition is the number of people leaving the workforce altogether, fueling a growing labor shortage across industries. Demand is increasing, while supply is decreasing. Organizations are worried there aren’t enough people to accomplish the work—particularly in industries like healthcare and technology that are seeing attrition rates 3.6 percent and 4.5 percent higher, respectively, than in the previous year.
Our research shows more than one third (36 percent) of respondents who quit did so without another offer in hand. To turn the Great Attrition into the Great Attraction, organizations must examine three questions: Which employee groups are leaving and where are they going, what are the potential implications of this exodus, and what can they do about it? We will start with the first two.
Who is leaving, and where are they going? Leaving one’s job without another position lined up is a risky move that not only eliminates an income stream but also reduces bargaining power in future employment negotiations. This phenomenon is more common among women (39 percent of respondents who quit) and individuals making less than $40,000 (47 percent of respondents who quit)—populations that in many ways have particularly suffered during the pandemic. Some employees are choosing to retire early, start their own business, or join the gig economy, while others opt to stay home to take care of family or their own health. In other words, people are leaving traditional employment for more autonomous ventures or to take a break.
What are the implications of this exodus? Historically, increases in voluntary employee attrition often signaled labor inflation, a war for talent, or other forms of “reshuffling” between employers. Even if many employees changed jobs for a promotion or better pay, the net effect on the labor supply was minimal because they were simply moving between employers.
Our research indicates voluntary attrition in the U.S. and other developed, Western countries will generally range from 15 to 40 percent in the short term, depending on the industry and skill set. However, as shown in the below model, the severity of the labor shortage will depend less on the amount of attrition and more on the proportion of people who leave the workforce entirely or switch to very different kinds of work (described as “opt-outs”).
If this labor shortage continues, there will be rising wages, inflation, and supply chain issues in the short term. In the long term, it could halt GDP growth, induce a recession, and cripple the future expansion of sectors dominated by blue-collar and manual workers.
The unprecedented number of people quitting without taking another similar job is having an enormous impact on labor supply. Organizations must act to retain their current employees and to attract people—both those at other companies and those who have temporarily left the traditional workforce. There are three broad sets of actions organizations should take: Create a more attractive work environment that is engaging, fulfilling, and sustainable; make the employer-employee relationship “stickier”; and go on offense to turn the Great Attrition into the Great Attraction. We will examine each of these three areas closely in an upcoming blog post.
This blog post is part of a series on the Great Attrition, exploring the immediate actions leaders can take to retain and attract talent at a time when employees are leaving their jobs in droves. Topics include how to keep top-performing talent, the nuances emerging in different industries, adaptability as an antidote to burnout, the implications for the labor shortage and what to do about it, how to build a sense of community in the new employee landscape, the complex relationship between DE&I and attrition, the importance of employee experience, socioemotional support as the organization’s social glue, the need to reimagine and personalize flexibility at work, and competition from the gig economy and entrepreneurism.