Turnover rates among employees have plummeted, reversing the trend seen during the post-pandemic “Great Resignation” era. While many firms, including manufacturers, welcome the lower attrition rates, the steep decline in quits is also posing a few problems.
The manufacturing data: Total quits in September were at their lowest in more than three years—to 216,000 from 230,000 in August, near pre-pandemic levels.
The chief economist’s view: The decline in attrition is welcome news overall for manufacturers looking to cut costs after several years of raising salaries to compete for workers, NAM Chief Economist Chad Moutray said.
- “This is a sign that churn—which has been a major issue for manufacturers amid a tight labor market—has eased significantly,” he told us. “In a really tight labor market, news that churn is slowing down is welcome, and for many manufacturers, they will be looking for signs that wage growth will moderate, too.”
However … Some companies in the overall economy have been surprised by the sharp decline in quits, which does come with certain challenges, according to The Wall Street Journal (subscription).
- “Turnover has declined so steeply at some large employers that companies now find themselves over budget on certain teams, requiring leaders to weigh whether to postpone projects or to cut additional staff as the end of year approaches.”
- “Other bosses worry about how to keep star employees engaged when there are far fewer vacant positions internally, making it harder to move people into new roles.”