© Copyright 2002 by the Wyoming Department of Employment, Research & Planning


Excerpt from "Industry Labor Flows in New Mexico"*

by:  Maurice L. Moffett, Ph.D., Economist, New Mexico Labor Market Review, New Mexico Department of Labor, Economic Research & Analysis

introduction by:  Krista R. Shinkle, Economist, Research & Planning

Strategies to increase worker retention are among the issues of greatest interest to the workforce development community.1 Turnover data can be used by workforce development councils to identify industries most likely to offer opportunities for stable worker attachment. To improve comparability of turnover data between states, several state Labor Market Information (LMI) offices2 joined together to create a standardized approach to the computation of turnover. Consequently, comparable turnover analysis can be used by these states to estimate the effects of training, wages, and benefits on worker retention. The three-part article series, “Nursing in Wyoming,” is an example of how turnover data are used to help explain the shortage in the supply of nurses (see Part Two of the series in this issue). The following article is an excerpt from the January 2002 New Mexico Labor Market Review. It represents another use of comparable turnover data. Both Wyoming’s study on nursing and New Mexico’s analysis of State labor flows could be replicated by other states, and the data could be compared among states for further analysis.

Turnover Rates

Labor turnover is often discussed as the movement of labor from one [job] to another. There will always be some level of normal turnover [as people seek] the highest pay for their skills and experience. The calculation of the turnover rate is usually an exit rate. The rates in Table 1 are calculated from the following formula, [which closely matches the Bureau of Labor Statistics’ definition of the Turnover Rate:]

                               (Count of Job Exits)
Turnover Rate =   
                               (Count of Workers)[

About a quarter of the New Mexico workforce left their employer during the first quarter of 2001. This is down from the previous quarter. The turnover rate for the fourth quarter of almost any year is dominated by [agricultural firms] completing any last activity and the ending of seasonal work that occurs during the holiday season. The rate of exit was higher in the first quarter of 2001 compared to 2000. This is largely due to an increase in exits from Mining, State and Local Government, and Transportation, Communications, [& Public Utilities] (TCPU).

Construction is generally a high turnover field [due to] the nature of the business. A construction worker will finish one project and then might work for someone else on a different project. Retail Trade is volatile because of the large number of restaurants and other establishments that have large amounts of job churning.[
4] [The Services industry includes] temporary agencies that [employ short-term workers].

1Tom Gallagher, “The Development of Common Measures of Turnover in Four States; Overview and Applications,” Symposium on Labor Market Information Applications of Wage Records for Workforce Investment, April 30-May 1, 2002.

2Currently, seven states have adopted the standardized computation of turnover rates: Alaska, Minnesota, Nebraska, New Mexico, Oklahoma, South Dakota, and Wyoming.

3Although this formula is identical to the formula used by Research & Planning, the terminology is different. We refer to the count of job exits as the count of exiting transactions, and the count of workers is the total number of transactions. We define a transaction as a worker-employer relationship. For example, if one person worked for seven employers during a quarter, the total number of transactions would equal seven. If one person worked for seven employers and another person worked for five employers during a quarter, the total number of transactions would equal twelve. 

4Job churning refers to the movement of workers from job to job and in and out of the labor market.

*Used with permission. Originally published on January 31, 2000 in New Mexico Labor Market Review, a monthly publication produced by the New Mexico Department of Labor, Economic Research & Analysis office. The entire article can be viewed at <http://www.dol.state.nm.us/dol_lmrsa6.html>.

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