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How Wages Impact Your Employee Turnover

Use our hourly wages-retention calculator to see the correlation between wages and retention.

Tools 10/12/2020

Select the average hourly wage you pay—or want to pay—your employees. Then, you’ll see your projected monthly turnover percentage for that wage.

Cost of Minimum Wage Calculator

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Lower wages mean higher turnover.

There’s plenty of research that shows the correlation between low wages and low productivity (and lack of employee engagement). But we wanted the numbers—the hard proof—that define the relationship between wages and retention. For primarily blue-collar positions, we wanted to be able to predict monthly turnover percentages and costs based on hourly pay. And that’s exactly what we did with our hourly wages-retention calculator.

It’s also worth noting that some lower-paying companies actually spend more than some higher-paying companies when it comes to workforce management. Why? Because the lower-paying companies have higher turnover costs in the form of job ads, onboarding, training and opportunity costs. Not to mention, poor culture and productivity issues.

Our data below found that in addition to higher turnover the lower an organization paid, 50% of that turnover occurred within the first 45 days of a new hire starting a job. That’s very little time for an organization to see any ROI from their hires before loosing them due to poor wages.

Additional factors that contribute to turnover:

  • Inconsistent work schedules, shift assignments and short term project work
  • Overtime causing fatigue and strain on child care, transportation and second jobs
  • Poor work environments with insufficient boarding, training and feedback

While there are myriad secondary factors that make for a happy workforce, reducing turnover and maximizing productivity begins with pay. Your initial offer to job candidates must be competitive, and as those former-candidates-turned-employees ascend through your organization, their pay should ascend equally as fast. While this “pay them to keep them” approach isn’t hot-off-the-press news, our data is. The numbers tell the entire story—and give you the science you need to succeed.

Additional sources to consider when evaluating pay within your organization: