Q & A – What effect does the unemployment rate have on turnover?

Q: What effect does the unemployment rate have on turnover?

A: Often turnover goes down when unemployment rates are higher and goes up when unemployment rates are lower.  One of the main reasons for this difference is that employees are generally less inclined to look elsewhere during harder economic times and more inclined to move when times are good.  Organizations tend to focus much more on retention when unemployment rates are low and it is harder to fill positions.  On the other hand, organizations may have a false sense of security when turnover drops due to higher unemployment rates and put less effort into the area of retention.  Keep in mind that how employees are treated during harder economic times impacts the level of turnover when the job market opens up.