Labor Turnover and Retention
The Monster Online Labor Turnover Data Series is a monthly tracking of online job posting activity by occupation and geographical region based on an analysis of Monster's internal database. The Data Series measures the share of replacement vs. new postings on Monster and can be seen as a leading indicator of turnover in the workforce. As such, the Data Series complements the Monster Employment Index, which measures overall online recruitment activity and related job opportunities without making the distinction between replacement vs. new postings.
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Every month, the Bureau of Labor Statistics (BLS) publishes measures of job vacancies and workforce churn. The job openings ratio is an important measure of the unmet demand for labor in the economy while knowing the frequency of employer-employee separations - or the turnover rate - can yield additional insights into labor market mobility as well as issues related to retention.
Click here to see the latest data on job openings and labor turnover
The Monster Online Labor Turnover Data Series
As a complement to the BLS turnover data, which is typically published with a time lag of one to two months, Monster tracks the relative number of online job postings aimed at finding replacement workers for pre-existing, but recently vacated positions vs. those aimed at filling newly created positions. The Monster Online Labor Turnover Ratio is thus defined as the share of total online help-wanted ads posted as a result of workforce churn rather than business expansion.
Similar to the Monster Employment Index, the online labor turnover ratio may serve as a leading job market indicator since sourcing activity typically precedes actual hiring by several months. Increases in the labor turnover ratio are historically correlated with upticks in the total separations (turnover) rate as published by the BLS. Of course, a rising labor turnover ratio may also indicate that a smaller share of the online recruitment activity seen on Monster is aimed at growing the business and expanding the workforce. This data should therefore be interpreted in the context of overall online recruiting trends.
Results
The online labor turnover ratio dipped further in the fourth quarter of 2007 and is down convincingly year over year. These findings are in line with recent data from the BLS, showing a downward tendency in workforce churn. In particular, the West noted significantly less activity related to staff replacement compared to the year-earlier quarter.
Among the occupations, Community and Social Services boasted the highest labor turnover ratio, followed by the typically Healthcare Practitioners/Technical and the high-churn Food Preparation and Serving category. Farming, Fishing, and Forestry was at the bottom.
Correlation
When plotting Monster Online Labor Turnover data against the Total Separations data from the BLS, Monster trends generally preceed BLS trends by 1 month. Indeed, new and replacement job posting activity among Monster customers provides an indication of future churn levels in the US labor market.
Job Vacancies and Workforce Churn
As part of its Job Openings and Labor Turnover Survey (JOLTS), the Bureau of Labor Statistics (BLS) publishes data that shed additional light on U.S. job market trends. The widely referenced job openings rate, which represents unmet demand for labor, is designed to complement the unemployment rate, which represents excess labor supply. The job openings rate is defined as total job openings divided by total employment and tends to rise in periods of sustained economic expansion. The following chart illustrates that the job openings rate, at 2.6 percent in March, has returned to levels last seen in 2005.
Another key metric is the turnover rate, defined as total separations (quits, layoffs and discharges, and other separations) divided by total employment. Intuitively, separations would seem to be countercyclical; as economic conditions deteriorate, employers lay off workers. However, because of the dominance of quits among the three components of total separations, separations have behaved procyclically (BLS, 2004). Voluntary quits tend to increase when the labor market improves because workers have more job opportunities to choose from. As the chart below demonstrates, the turnover rate stood at 3.2 percent in March, suggesting churn in the U.S. job market has slowed.
