How Wages Affect Employee Turnover

beautiful cashier

Ah, money, the root of all evil, Scrooge’s favorite swimming medium and the thing that makes the world go round according to Liza Minelli. We all want it, and most of us never have enough of it. Why is that? Is because minimum wage doesn’t match inflation? Probably, but that’s a can of worms that I’ll open on a different day, today we’re going to talk about how wages affect employee turnover.

Turnover Costs Money


Don’t Worry You’re Still A Cog


Retailers such as Walmart, TJK, Gap, Starbucks and IKEA aren’t throwing around money because they like their lower level 9 to 5 employees; it’s an attempt at trying to keep those people longer. Because beyond the cost of training a new person to replace the person that said: “This minimum wage job isn’t worth my time (which it probably isn’t)” they also get stiffed with the original employee’s training. Because if you weren’t aware companies hire employees to make them money and they train them to do so.

Now let’s say Martin Notgiveaflying F. Flannigan is hired for a retail position at Oppressive Big Box Store. O.B.B.S. dedicates money (in the form of other employees’ time) to training Mr. Notgiveaflying F. and Mr. Notgiveaflying F. quits shortly after training. O.B.B.S. gets stiffed with the bill of said (and oft repeated) training, but if they pay Martin (that’s Mr. Notgiveaflying F. for clarification) a bit more, and he stays then the cost of his training is counterbalanced by his sales. If he stays long enough, he may even make more money than the cost of his training.

More Money Less Turnover?

Ok, great so these huge faceless corporations are paying more money, which makes their investors sweat through their Italian tailored suits, but does it actually help them retain their employees? If companies such as the Container Store are taken as an example, who pay their employees twice the industry’s standard: around 48.000 dollars and see only a 10% annual turnover rate (compared to Walmart’s 60%) then yes. Costco is another great example; employees make an average of 20.89 dollars/hour, and they have a measly annual turnover rate of 5%, so again the answer seems to be a resounding yes. But, beyond keeping employees happy and working longer for them, it also has a reflection on the company’s public image, just ask Walmart about that.

Do you have anything else to add to our conversation? Let us know in the comment section below.