Employee turnover is expensive across every sector, but the price looks very different depending on where you look. A hotel housekeeper who leaves costs far less per departure than a departing registered nurse — but hotels lose employees at five times the rate. In retail, each exit looks manageable until you multiply it by sixty departures per hundred employees per year.
This piece pulls together current turnover cost data from Gallup, SHRM, the Work Institute, the NSI National Health Care Retention Report, Cornell University's Center for Hospitality Research, Mercer, and the Bureau of Labor Statistics.
For context on how organizations are responding to high turnover with flexible staffing models, see our guide to employee retention strategies and our overview of staffing services. For the broader data behind attrition decisions, see our employee turnover statistics research.
What employee turnover costs overall
Gallup estimates that U.S. businesses lose approximately $1 trillion every year to voluntary employee turnover. The Work Institute puts the number at close to $900 billion annually in direct and indirect replacement costs. Both figures capture the obvious line items — recruiting, onboarding, training — but also harder-to-measure losses: institutional knowledge that walks out, morale declines among remaining employees, and downstream customer impact.
Mercer's 2025 US Turnover Survey, covering 2,617 U.S. organizations, found the average voluntary turnover rate had dropped to 13% by 2025, down from a peak of 24.7% during the Great Resignation in 2022. But Gallup's May 2025 measurement found 51% of U.S. employees were actively watching for or seeking a new job, the highest self-reported rate since 2015. Turnover risk and actual turnover rates don't always move in sync.
The cost per departure depends heavily on the role. SHRM benchmarks put replacement cost at 50% to 200% of the departing employee's annual salary, driven by role complexity and seniority. The Work Institute's more conservative floor is 33% of annual salary, with roughly one-third covering direct replacement cost and two-thirds going to indirect losses most organizations never formally track.
Direct versus indirect turnover costs
Direct costs include job posting fees, recruiter time, background check and assessment costs, interviewing hours, signing bonuses, and onboarding program delivery. SHRM pegs the average direct cost to hire one new full-time employee at $4,700, not counting the salary for whoever manages the process. For specialized roles, direct costs run higher.
Indirect costs are the larger and harder-to-track category. Work Institute data finds approximately two-thirds of total turnover costs are indirect: lost institutional knowledge, reduced team morale, increased workload on remaining staff, higher error rates during the transition period, and reduced customer service quality. New hires take an average of one to two years to reach the full productivity of the employee they replaced, according to SHRM. During that ramp, the organization absorbs partial output without capturing the full value of the headcount.
A 2026 survey found 73% of hiring managers report turnover places a heavy burden on remaining staff, which feeds a cycle: overloaded employees are more likely to quit, and each departure adds to the load on whoever stays. Burnout-related churn is estimated to consume 15% to 20% of annual payroll budgets in high-turnover environments.
Gallup puts a number on the downstream performance cost: teams with high engagement and low turnover deliver 23% higher profitability than their low-engagement counterparts. That gap represents what organizations give up when they treat retention as overhead rather than a financial input.
Hospitality and food service: highest turnover rate, concentrated direct costs
Hospitality runs the highest annual turnover rate of any major industry. BLS JOLTS data consistently shows accommodation and food services recording quit rates above 4% per month, translating to a total annual turnover rate of approximately 75%. A restaurant or hotel with 100 employees can expect to replace three-quarters of its workforce in a given year.
J. Bruce Tracey and Timothy R. Hinkin at Cornell University's Center for Hospitality Research calculated replacement cost per hospitality worker at an average of $5,864, rising to $9,932 for employees in more complex or supervisory roles. More than half of those costs come from the productivity loss while new hires reach acceptable proficiency — not from the recruiting process itself.
Run the numbers at the property level. A 500-employee hotel with 75% annual turnover processes roughly 375 departures per year. At the Cornell average of $5,864 per exit, that's more than $2.2 million in annual turnover costs before any supervisory replacement is counted.
Retail trade: high volume, wide cost range
BLS data shows retail trade's annual turnover rate near 60%, with general merchandise and clothing subsectors reaching as high as 81%. Mercer's 2025 survey found retail and wholesale carried the highest voluntary turnover rate at 26.7% among surveyed industries, well above the 13% national average.
Replacement cost per retail employee ranges from $2,000 to $10,000 depending on role complexity and location, with an industry average closer to $4,200 to $5,100 per exit. Hourly associates in high-volume stores sit at the lower end, where hiring cycles are faster and training investment is lower. Department managers and specialized sales staff push toward the upper end.
The volume is what makes retail turnover expensive in aggregate. At $4,500 per exit, a 200-person store with 60% annual turnover absorbs $540,000 per year in turnover costs — roughly the payroll of six to eight full-time associates.
Healthcare: highest cost per individual departure
Healthcare has the most thoroughly documented and highest per-departure turnover cost of any sector, driven by the specialized training, licensing, and clinical competency requirements attached to most roles.
The 2026 NSI National Health Care Retention and RN Staffing Report, covering 527 hospitals across 40 states using 2025 data, puts the average cost to replace one bedside registered nurse at $60,090. The national hospital RN turnover rate was 17.6% in 2025. At that rate, the average hospital loses between $4.2 million and $6.2 million per year solely from RN churn. Each 1% change in RN turnover costs or saves a hospital approximately $295,000 annually.
The recruiting timeline adds carrying costs that don't show up in the formal turnover calculation. The average time to recruit an experienced RN was 78 days in 2025, according to NSI. During that window, hospitals cover gaps with agency staff at premium rates, existing nurses work extra shifts at overtime rates, or beds go out of service.
The national hospital RN vacancy rate stood at 8.6% as of 2025, alongside HRSA projections of a shortage of more than 78,000 full-time RNs nationally. That supply constraint puts upward pressure on replacement costs and recruiting timelines as hospitals compete for the same shrinking pool.
For physicians, no single industry-wide benchmark exists given variation in specialty and pay. The SHRM range of 50% to 200% of annual salary still applies, and for attending physicians in high-demand specialties earning $300,000 to $500,000 annually, that means replacement costs between $150,000 and $1 million per departure — before lost revenue from unfilled patient capacity enters the picture.
Technology: high voluntary turnover, high replacement cost
The technology sector's voluntary turnover rate runs around 24% annually, roughly twice the national average, driven by competitive hiring markets and frequent lateral moves between employers.
Average spending on retention-related costs in technology runs approximately $28,900 per employee per year. Replacement cost for software engineers, data scientists, and senior technical staff is substantially higher, with executive and senior technical hires averaging nearly seven times the replacement cost of non-executive hires.
What rarely gets counted is knowledge depreciation. Engineers and architects who leave take context about systems, architectural decisions, and accumulated technical debt with them — context that is rarely written down anywhere. Rebuilding it costs months of the incoming employee's productivity and often produces design decisions that duplicate or contradict earlier work.
Manufacturing: skilled worker shortage compounds turnover expense
Manufacturing's turnover rate is lower than hospitality or retail. BLS data shows the sector's monthly quit rate around 1.4% as of mid-2025, roughly 16% to 17% annualized. But replacement costs for skilled frontline workers are high enough that each departure is significant on its own.
A 2024 Deloitte survey of more than 300 HR leaders at U.S. manufacturing companies found 60% reporting replacement costs of $10,000 to $40,000 for skilled frontline workers. More than 56% said turnover had a moderate to severe impact on financial results, and over 80% said attrition had directly disrupted production.
When a machinist, welder, or quality technician leaves, there is often no local replacement available. The recruiting timeline extends. Supervisors absorb the gap. Production schedules slip. None of those costs appear on a recruiting invoice, but all of them hit margins. Deloitte separately projects the U.S. manufacturing sector faces a shortfall of more than 1.9 million workers through 2033, which means the replacement difficulty in current turnover costs is likely to worsen.
Finance and insurance: lowest voluntary turnover, but not free
Finance and insurance run at the lower end of voluntary turnover. Mercer's 2025 survey found insurance and reinsurance recorded a voluntary turnover rate of just 8.2%, less than half the national average. Banking and financial services more broadly run closer to 15% voluntary turnover, still below technology or retail.
Higher compensation, structured career paths, and a workforce with more tenure and specialized credentials all reduce mobility. But lower turnover doesn't make costs negligible. Replacing a compliance officer, financial analyst, or relationship manager still runs at the SHRM-benchmarked 50% to 200% of annual salary, and pay in those roles is typically well above median wages.
The bigger risk in finance isn't the quantity of departures but the selection problem: the employees most likely to leave tend to have the most in-demand skills and the most developed client relationships. Each departure carries more weight than headcount data alone suggests.
Turnover cost benchmarks by industry
| Industry | Annual turnover rate | Estimated cost per departure | Primary source |
|---|---|---|---|
| Hospitality / food service | ~75% total | $5,864 to $9,932 | Cornell / BLS JOLTS |
| Retail trade | ~60% total | $2,000 to $10,000 | BLS / Mercer 2025 |
| Healthcare (RNs) | 17.6% RN / 18.5% all staff | $60,090 per RN | NSI 2026 Report |
| Technology | ~24% voluntary | $28,900+ per employee | BambooHR 2025 |
| Manufacturing | ~16 to 17% annualized | $10,000 to $40,000 (skilled) | Deloitte / BLS JOLTS |
| Finance and insurance | 8% to 15% voluntary | 50% to 200% of salary | Mercer 2025 / SHRM |
| All industries average | 13% voluntary | 33% to 200% of salary | Gallup / SHRM / Work Institute |
What these numbers mean for retention investment
Work Institute data shows approximately one-third of all voluntary turnover happens within the first 12 months of employment. That timing matters for where retention investment returns the most: pre-hire selection accuracy, onboarding quality, and early-tenure management behavior have a disproportionate influence on whether a new hire reaches the point where they recover their hiring cost.
The 51% of workers watching for new opportunities in Gallup's May 2025 measure suggests retention pressure isn't concentrated in the sectors with the highest published turnover rates. It's spread across the workforce. Industries with lower turnover aren't immune — they're just losing a smaller share of a pool that's broadly more mobile than it was a decade ago.
Gallup estimates 42% of voluntary turnover is preventable, based on the reasons departing employees themselves give. Most organizations are absorbing a large share of their turnover costs from problems that are fixable: management quality, career development gaps, scheduling inflexibility, compensation that hasn't kept up. That's the part of the cost that doesn't have to be there.
Sources
- Gallup. "42% of Employee Turnover Is Preventable but Often Ignored." 2025.
- SHRM. "SHRM 2025 CHRO Benchmarking Data Brief."
- SHRM. "The Myth of Replaceability: Preparing for the Loss of Key Employees."
- Work Institute. 2024 Retention Report. 2024.
- Work Institute. 2025 Retention Report. 2025.
- NSI Nursing Solutions. 2026 National Health Care Retention and RN Staffing Report. 2026.
- Tracey, J. Bruce, and Timothy R. Hinkin. "The Costs of Employee Turnover: When the Devil Is in the Details." Cornell Center for Hospitality Research.
- Mercer. 2025 US Turnover Survey Results. 2025.
- Bureau of Labor Statistics. Job Openings and Labor Turnover Survey (JOLTS), Table 22: Annual Average Quits Rates by Industry.
- Bureau of Labor Statistics. JOLTS Table 4: Quits Levels and Rates by Industry. 2025.
- Deloitte. "A Shrinking Workforce May Thwart US Manufacturing Ambitions." 2024.
- BambooHR. "Employee Turnover Benchmarking Trends in 2025."