Between January 8 and February 12, 2026, our research team gathered employee turnover data from 247 U.S. companies across 11 industries. We used official data from the U.S. Bureau of Labor Statistics, SHRM, Mercer's 2025 Turnover Survey, and Gallup. This report shows how to calculate turnover, provides 2025 industry benchmarks, and offers retention strategies backed by recent data.

High employee turnover drains company finances. Replacement costs range from 33% to 200% of an employee's annual salary. Learning how to calculate and benchmark your turnover rate is the first step to cutting these costs. This guide shows you how to calculate employee turnover, provides 2025 industry benchmarks, and offers strategies to improve retention.

The Annual Employee Turnover Rate by Industry - 2025

Source: Mercer, Homebase, Hotel Business, 10Speed Cloud, The Resource

Key Insights:

Hospitality turnover is 7.5x higher than professional services. This is driven by hourly wage structures and limited career advancement opportunities.

Industries requiring specialized certifications (Insurance, Healthcare) have 67% lower turnover than retail-adjacent sectors.

Trucking has a staggering 90% turnover rate. This reflects intense competition for drivers and challenging work conditions.

How to Calculate Employee Turnover Rate

Step 1: Determine the Number of Separations

Before you calculate turnover, define what counts as a separation. This includes voluntary resignations (employees who quit) and involuntary terminations (employees who were fired). Exclude internal transfers, employees on leave, and furloughed workers to ensure accuracy.

Step 2: Calculate the Average Number of Employees

Next, calculate the average number of employees on your payroll during the period you are measuring (monthly, quarterly, or annually). Using an average is more accurate than a single headcount. The formula is:

(Beginning # of Employees + Ending # of Employees) / 2

Step 3: Apply the Turnover Rate Formula

Finally, apply the standard turnover rate formula. This shows separations as a percentage of your average workforce size.

(Number of Separations / Average Number of Employees) x 100

Example Calculation:
A restaurant starts January with 45 employees and ends with 53 employees. During the month, 8 employees left.

Step 1: Number of Separations = 8

Step 2: Average Employees = (45 + 53) / 2 = 49

Step 3: Turnover Rate = (8 / 49) × 100 = 16.3%

The True Cost of Employee Turnover

Understanding the financial impact of turnover is critical for making the case for retention investments. The costs go far beyond the direct expenses of hiring a replacement.

Source: Compiled by Gratuity Solutions from SHRM and Gallup data, 2026

These costs add up quickly. They vary based on the role being filled.

Source: Gallup, SHRM, Built In (compiled 2026)

How to Reduce Employee Turnover

Strategy 1: Implement On-Demand Wage Access

Financial stress is a primary driver of turnover, especially among hourly workers. Studies show that 78% of American workers live paycheck-to-paycheck. Also, 64% cite financial anxiety as a reason for seeking new jobs. Companies using same-day pay solutions report 27-36% improvements in retention rates. These systems let employees access earned wages before the traditional pay cycle. This reduces financial emergencies that lead to absenteeism and resignation.

Strategy 2: Automate and Digitize Manual Processes

Administrative burden, such as manual tip calculations and payroll errors, frustrates managers and employees. These tasks can take 8-12 hours of a manager's time per week. Automating these processes reduces compliance risk and improves transparency. It also frees up managers to focus on guest service and team development. This improves the work environment.

Strategy 3: Foster a Culture of Recognition and Growth

Lack of appreciation is a major factor in employee departures. About 44% of employees cite it as a reason for leaving. Structured programs for peer-to-peer recognition, milestone awards, and performance bonuses can improve morale. Also, providing clear career paths and internal promotion opportunities shows employees they have a future with the company. This makes them more likely to stay.

Employee Turnover Trends Over Time

Employee turnover rates change with economic conditions. The period from 2019 to 2025 shows a volatile labor market. It moved from pre-pandemic stability to the upheaval of the Great Resignation and then normalized.

Employee turnover rates change with economic conditions. The period from 2019 to 2025 shows a volatile labor market. It moved from pre-pandemic stability to the upheaval of the Great Resignation and then normalized.

Employee Turnover Rate in Practice

High employee turnover costs U.S. businesses $630 billion annually. But the root causes (financial stress, administrative friction, and lack of recognition) can be addressed. By calculating your turnover rate accurately and benchmarking against industry standards, you can identify specific intervention points. Gratuity Solutions offers automated payment and tip distribution tools designed for hospitality operators facing high turnover challenges.

Request a Demo to See How Gratuity Solutions Can Reduce Your Turnover Rate

Frequently Asked Questions (FAQ)

Q: How do I calculate monthly vs. annual turnover?

A: To find the annual rate, calculate the turnover rate for each of the 12 months. Then add them together. This method gives a more accurate picture of your turnover trends than calculating a single annual rate from yearly data.

Q: Should I include contractors in my turnover calculation?

A: No, turnover calculations should only include employees on your company's payroll. Do not include independent contractors, freelancers, and temporary workers from an agency in your head count or separation numbers.

Q: What's the difference between regrettable and non-regrettable turnover?

A: Regrettable turnover is the loss of high-performing employees who are difficult and costly to replace. Non-regrettable turnover is the departure of low-performing employees. Segmenting your turnover data this way helps you focus retention efforts on the employees who add the most value.

Sources

Gratuity Solutions Research Study. (February 2026). [Proprietary data, no URL] Mercer. (2025). 2025 US Turnover Survey. Retrieved from
https://www.imercer.com/articleinsights/workforce-turnover-trends

Homebase. (2025, October). Restaurant Employee Turnover Rate: 2025 Statistics, Costs.... Retrieved from
https://www.joinhomebase.com/blog/restaurant-employee-turnover

Hotel Business. (2025, December). Report: Hospitality hits all-time workforce high; turnover at crisis level. Retrieved from
https://hotelbusiness.com/report-hospitality-hits-all-time-workforce-high-turnover-at-crisis-level/

10Speed Cloud. (2024, December). 2024 Trucking Recap & 2025 Outlook: Trends & Insights. Retrieved from
https://10speed.cloud/blog/2024-recap-and-2025-outlook-key-trends-and-insights-for-the-trucking-industry/

The Resource. (2025, November). Average Turnover Rate in Healthcare : 2025 Data. Retrieved from
https://www.theresource.com/2025/11/19/healthcare-turnover-rate/

Gallup. (2019, March). This Fixable Problem Costs U.S. Businesses $1 Trillion. Retrieved from
https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx

SHRM. (2024, August). Calculate Employee Turnover Rate With This Step-by-Step Guide. Retrieved from
https://www.shrm.org/topics-tools/tools/how-to-guides/how-to-determine-turnover-rate

Built In. (n.d.). The True Costs of Employee Turnover. Retrieved from
https://builtin.com/recruiting/cost-of-turnover

Industry Average Annual Turnover Rate (2024–2025)
Hospitality & Leisure (Overall) 70–80%
Restaurants (Full-Service) 75%
Quick-Service Restaurants 87–100%
Retail and Wholesale 26.7%
Healthcare (Nursing Positions) 27.1%
Healthcare Services (Hospitals) 18.3%
Logistics & Transportation (Trucking) 90%
Construction 5.0%
Manufacturing 3.0%
Professional & Business Services ~10%
Insurance/Reinsurance 8.2%
Cost Category Examples
Direct Replacement Costs Recruitment advertising, interview time, agency fees, background checks, new hire training.
Onboarding & Training Costs Manager's time, formal training programs, orientation materials.
Lost Productivity Costs Time to ramp up to full productivity (3–6 months), vacant role productivity gap.
Cultural & Morale Costs Remaining employees' increased workload, loss of institutional knowledge, team disruption.
Employee Type Average Replacement Cost (% of Annual Salary)
Hourly Workers 16% – 33%
Salaried & Technical Roles 50% – 150%
Executive & Leadership Roles 200%+
Year Annual Turnover Rate Year-Over-Year Change Key Economic Context
2019 22.4% Baseline Pre-pandemic stability
2020 19.1% -3.3% Pandemic hiring freeze
2021 27.1% +8.0% Great Resignation peak
2022 24.3% -2.8% Post-resignation adjustment
2023 22.8% -1.5% Gradual normalization
2024 21.9% -0.9% Continued decline
2025 20.7% -1.2% Stabilizing trend