What Is The Average Employee Retention Rate by Industry? [2021 Update]

Attrition has always been expensive for companies, but in many industries, the cost of losing good workers is rising, thanks to increasingly tight labor markets. This makes measuring employee turnover more important for employers.

How can you gauge if you’re spending too much on employee turnover? What is the average employee retention rate?

Compensation Force measured the level of total separations in the United States 2016 at 15.1%. In other words, 15.1% of the total U.S. workforce left their job in 2016. The separation rate includes employees who voluntarily quit a position, layoffs, retirements, and discharges.

SHRM predicts the annual turnover rate to be close to 19%, and also assumes that the average cost-per-hire to fill a position at $4,129. Some studies show that replacing an entry-level position can cost up to 40% of an employee’s salary.

Losing good employees is expensive, and in some cases avoidable.

Which industries have the best and worst employee retention rates?

The industries with the lowest separation rates

The industries with the lowest separation rates typically fall into government positions, which is logical. Historically, government jobs come with pensions and clear retirement paths, which may contribute to a notoriously lower turnover sector. Inside the government, the lowest turnover positions are:

  • Federal government positions: 1.3%
  • State and local education government positions: 1.4%

Outside of government roles, the industries with the lowest separation rates are:

  • Finance and insurance jobs: 1.7%
  • Wholesale trade: 1.9%

The industries with the highest separation rates

  • Staffing: 352% (Source: American Staffing Association)
  • Hotels: 60-300% (Source: CHA International)
  • Supermarkets: 100%(Source: Small Business Chronicle)
  • Retail: 59% (Source: Small Business Chronicle)
  • Fast food (or QSR): Compared to other industries, the QSR industry is said to have the highest employee turnover rate every year, which varies from 50% to 100%. 

The higher the turnover in your organization, the more susceptible you’ll be to increased costs. Find out how to reduce turnover with DailyPay.


How do I find turnover rates in my industry?

DailyPay has you covered! We’re compiling recent data on a wide range of industries. If you see your industry below, click through to read more on what’s being reported about turnover and retention for businesses similar to yours:

(Don’t see your industry linked yet? Check back again – we’ll be continuing to update this list throughout the year.)

Does your company have an average employee retention rate?

As mentioned earlier, 10% is a good figure to aim for as an average employee turnover rate – 90% is the average employee retention rate.

With that said, the 10% who are leaving should be a majority of low performers – ideally, low performers who are able to be replaced with engaged, high-performing team members. If the 10% leaving your company are high performers, you can expect to spend more to replace them.

Another way to describe employee retention rate is “how well does your business maintain employee satisfaction?” A good way to measure this is by using eNPS, or Employee Net Promoter Score. If you’re missing the mark with employee retention, how can you improve, internally?

What are some ways to prevent turnover and promote employee retention?

One key to improving retention is to evaluate current tactics like recruiting, employee onboarding and overall company culture – what areas can be improved? What can you do to keep your employees engaged and happy?

A new study conducted in 2021 from the Mercator Advisory Group, “Modernizing Payroll Through Earned Wage Access,” examined 10 industries and found that average tenure improved by as much as 73% for workers in nursing homes using DailyPay’s earned wage access solution. These notable improvements vary by industry. Some other industry results highlighted in the research include transportation +68%, call centers +51%, caregivers +27%, and retail +24%.

Employee Recruiting

When you’re going through the interview process do you get the sense that a potential candidate is a job hopper? If an employee quits shortly after they’ve been hired, can you gauge if employee’s expectations about the job were different than reality? If you are forced into firing people because they don’t have the skills to do the job, this, as well as the aforementioned issues, could be a recruiting issue increasing your turnover rate.

Employee onboarding

According to a paper written by Dr. Frederick P. Morgeson for National Association of Human Resource Consultants, it is often helpful for recruiters to act as the point person for new hires during the first 30 days on the job as a strategy to strengthen the relationship between new employees and employers.

Employee Engagement

Creating the right culture goes a long way to attracting and retaining strong talent. In a study by Towers Perrin, engagement – or lack thereof – can be directly related to turnover. 66% of highly engaged employees reported that they had no plans to leave their company, compared to 31%, of disengaged employees who are actively looking for new work. What can you do to cultivate loyalty to from your employees?

Employee Training

Training is a great way to show that you are invested in your employees. Training can range from career development opportunities to financial wellness programs. By showing that you are invested in your employees professional and personal lives, you are encouraging loyalty and engagement.

Pay well, or pay differently

It’s no secret that many employees look at pay as an indicator of their happiness at work. The moment an employee is unable to pay their bills, or live a comfortable lifestyle, they will instantly think to themselves “is this the job for me?”

Paychex recently asked workers, of varying generations, what was the most common reason to leave a job. Across the board, baby boomers, millennials and Gen X all agree money is a primary factor.

By offering flexibility with pay, or offering different pay than a competitor, you are again encouraging employee loyalty. If you can’t raise salaries, how can you make your pay feel different?

DailyPay might be the solution for improving employee retention rates in your industry. In a recent case study, we learned that one DailyPay partner—a senior living facility—was able to reduce turnover by more than 7%.

Don’t let turnover eat away at a healthy bottom line. Learn how DailyPay can help reduce turnover and increase employee engagement.