You’ve heard how hard it is to keep construction workers on the job --- that the shortage of workers means people move from job to job at high rates, frequently able to find a better job at a competitor. And that’s not accounting for the workers who choose to leave the industry entirely if the right opportunity arises. 

Survey data confirms this story of high rates of voluntary departure. A “quits rate” measure in the construction industry by the U.S. Department of Labor shows the percentage of all workers who voluntarily leave a job in a given month for reasons other than retirement. In the six years running up to the Great Recession, that rate averaged 2.4 percent per month – so 2.4 percent of all construction workers voluntarily quit their job each month, on average, between November 2001 and October 2007. When the Great Recession took hold, that rate fell substantially because alternative employment was hard to come by, and from late 2007 until the end of 2019, monthly quits averaged only 1.8 percent.

For the past three years, the U.S. construction industry has reverted to a higher rate of quitting, and the quits rate has averaged 2.2 percent of all workers from 2020 through 2022. 

What accounts for this higher rate of quitting? Why are workers more likely to leave their jobs now than in the past? Much of it is simple economics – quit rates rise as labor markets get better for workers. So when unemployment rates spiked during the great recession, workers quit less frequently. As labor markets improved, they quit more often. And when Covid induced a huge demand for workers, especially in construction, quit rates rose sharply again. 

But quits rates in Construction are also chronically higher than in many other industries (although they are definitely not the highest out of all industries – that honor belongs to Leisure and Hospitality and Retail industries). What makes construction a higher turnover industry? Working conditions often get blamed for higher turnover in construction, and maybe that is part of it. Such stories are hard to evaluate objectively. 

But the rate of workers quitting is only one side of labor turnover. The other part of the story is the rate of involuntary worker separations – in other words, layoffs and discharges (or terminations) initiated by employers. That’s where the story has really changed in the construction industry in the last few years. One thing you’ll notice in the Layoffs and Discharges figure below that measures the monthly layoff and discharges rate is that there are distinct seasonal patterns. Employers lay off workers in the winter much  more than in the summer – December and January are months with particularly high layoff and discharge numbers. Yet, again, things seem to have changed in recent years. Prior to 2018, it was not unusual for more than 5 percent of the construction industry to be laid off in winter months. But the tightening labor market and chronic hiring difficulties appear to have made employers more conservative with their winter layoffs. In 2020, 2021, and 2022, winter layoff rates were 3.5 percent or lower, a much more modest pattern than previously. 

When you account for both voluntary and involuntary departures, turnover in the construction industry is not substantially higher in the past three years than it was previously, and in fact it is somewhat lower. But the causes have changed. While workers are more likely to voluntarily quit and leave for alternative employment, they are much less likely to be involuntarily terminated by an employer. Overall turnover rates are stable to declining, but they are now driven by workers quitting rather than employers terminating. 

This is just one of many examples of rising worker power in the U.S. labor market.