Turnover Cost Calculator Can Help Measure Effective Workplace Policies

February 12, 2019, Washington, DC — The Family and Medical Insurance Leave Act (FAMILY Act), introduced into both houses of Congress today, would create a national paid leave program that covers working people across the country. There are benefits to employers too. Research has found that paid leave can help employers by reducing turnover costs.

Employee turnover costs businesses millions of dollars each year. However, many employers don’t accurately track this expense, which could be reduced by improving workplace conditions. To help business owners understand the cost of turnover, the Center for Law and Social Policy (CLASP) and Center for Economic and Policy Research (CEPR) have released an updated turnover cost calculator. This dynamic tool allows employers to calculate turnover costs by responding to 10 simple questions.

When employees leave or are laid off, companies incur numerous expenses searching for and on-boarding their replacements; these include advertising, recruiting, background checks, benefits administration, training, and lost productivity while new employees become proficient at their jobs. Taken together, these costs can have serious implications for bottom lines. The turnover calculator allows businesses to input wages; weekly hours; and recruiting, hiring, and training costs to determine the financial impact for different categories of workers. 

In today’s competitive marketplace, employers are closely attuned to employee retention factors. That’s why many have begun to implement worker protections that reduce turnover, including earned sick days, paid family and medical leave, and fair scheduling practices. But while some employers are leading in these areas, too many businesses haven’t caught on. More than 34 million workers about one-in-three, still lack paid sick days; just 17 percent of civilian workers have access to paid family leave, and only about 40 percent of workers have short-term disability leave through their employers.

“A startling number of workers lose their jobs because they need to recover from illness, care for sick family members, or are welcoming a new baby,” said Pronita Gupta, director of job quality at CLASP. “Job loss is devastating to families’ economic security, and the cost of hiring new workers cuts into businesses’ bottom lines. That’s why a growing number of employers are not only offering paid leave to their own employees but supporting public policies that expand access to a majority of U.S. workers.”

“One of the greatest investments companies make is in employees,” added Eileen Applebaum, senior economist at CEPR. “But when an employee leaves, that investment is diminished. There are very good workplace policies like paid sick leave and national policies like paid family and medical leave insurance that help prevent losing that investment. Once employers understand the cost of turnover, they can see for themselves how workplace practices and public policies that support their employees affect their costs.

Click here to access the turnover calculator.

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The Center for Law and Social Policy (CLASP) is a national, nonpartisan, anti-poverty organization advancing policy solutions that work for low-income people. With nearly 50 years of trusted expertise, a deeply knowledgeable staff, and a commitment to practical yet visionary approaches to opportunity for all, CLASP lifts up the voices of poor and low-income children, families, and individuals, equips advocates with strategies that work, and helps public officials put good ideas into practice. The organization’s solutions directly address the barriers that individuals and families face because of race, ethnicity, and immigration status, in addition to low income. For more information, visit clasp2022.tealmedia.dev and follow @CLASP_DC.

The Center for Economic and Policy Research (CEPR) promotes democratic debate on the most important economic and social issues that affect people’s lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.