Job turnover among displaced agricultural workers within the Mississippi Delta area of Eastern Arkansas : extent, costs, and criteria of cause
Authors:   , Williamson Handy 
Published: May 2024

Labor turnover has been defined as a phenomenon which serves to reflect the degree of stagnation or instability in the labor market. Whenever the rate of labor turnover is high, vis-a-vis, no expansion, excess movement and waste are said to result. On the other hand, when the labor turnover rate is low or equal to zero, the labor market is defined as in a state of stagnation. In either case (extremely high levels of turnover or extremely low levels of turnover) waste and under utilization of manpower are said to result. The impact from either too much or too little labor movement is felt to be dependent upon the size and maturity of the labor market. Moreover, the general level and diversity of skill on the part of labor market participants, may act to enhance or abate the effect of job turnover. This study was undertaken to investigate labor turnover in a selected area of eastern Arkansas. The area was chosen because of the large number of displaced agricultural workers who were in the employ of small industrial establishments which had recently moved into the area. It was hoped that the study would provide information which would be of value in solving problems related to the process of rural industrialization. Also, it was felt that information could be gained on problems faced by displaced agricultural workers as they transfer out of agricultural occupations. The purpose of this study, stated in a more specific sense, was to provide answers to some basic questions. They were: (1) Are the labor turnover rates among the firms high enough or low enough to warrant concern? (2) If labor turnover does, in fact, persist at problem levels, are there circumventable costs which arise in direct relationship with labor turnover? (3) Are there specific variables which tend to enhance or have a directional relationship with job turnover and cost? (4) What is the nature and extent of the relationship between labor turnover and specified variables? Data utilized in the study came from a number of sources including: (1) a survey schedule, (2) personnel and payroll records of firms, (3) area manpower studies, and (4) United States Census Bureau. The data were analyzed through the employ of some basic statistical models adapted for use in this study. A form of the stepwise regression routine (Goodnight's Maximum R2 Improvement Technique) was used to investigate relationship's between dependent variables and sets of independent variables. The analysis of variance linear model was also adapted for use in the study. The simple linear form of the ANOVA technique was used in determining if the firms were of the same population when considerations were given to criteria such as: (1) the level of turnover, (2) the cost of turnover and (3) the rates of quits, discharge, layoff, recall, new hire, flux and replacement. A version of the three factor factorial model (with nested classifications) was used to investigate the effects of specified factors on the rate of labor turnover in the panel firms. This study was limited by a number of factors. Thus, the conclusions and generalizations are limited. The scope of the inquiry was limited to: (1) only those firms of the eastern Arkansas area which employed displaced agricultural workers and hired more than fifty factory employees, (2) a period of three years - January 1970 through December 1972, (3) a six county section of the East Planning, and Development District of eastern Arkansas, and (4) investigation of the extent, costs, and causes of labor turnover in the panel firms. By virtue of the process used in selecting the firms and in selecting the study area, this investigation was a case study in nature. The findings on the general extent of labor turnover were supportive of the initial hypothesis that depressed wage regions are subject to high rates of "job switching." In most of the panel firms the rate of labor turnover was highly variable and reached extreme periodic highs and lows. Estimates made on monthly, quarterly and yearly bases were all high relative to representative United States manufacturing firms during the same period. Fluctuations in the rate of job turnover for all firms were sharp and typified a situation of instability in the labor market. In 1970 the mean level of employee turnover reached a within year high of 18 per 100 workers and fell to a low of 2.2 per 100 workers at one point. Separate observations on individual firms show that some firms sustained even more severe fluctuations, although most firms experienced declining rates over the 1970-72 period. Job switching was not identified as a market-wide-time-specific phenomena as its presence was seldom of uniform and harmonic occurrence among firms over time. The high rate of labor turnover arose from a combination of voluntary quits, replacements, and a slightly expanded level of employment in the panel firms. From an aggregate perspective it appeared that turnover arose from a collection of individual worker decisions to switch from situations perculiar to each firm and from market phenomena which affected the firms in a dissimilar temporal manner. The costs of labor turnover were identified to have emerged in four basic categories: (1) recruitment cost, (2) selection and placement cost, (3) on-the-job cost, and (4) cost of separating the incumbent. The overall labor turnover bill was comprised of four major components. Their aggregate and per hire cost over the period were: Aggregate Per Hire Recruitment ........................ $ 25,727 $ 5 Selection and Placement ............ 603,645 124 On-the-Job Cost .................... 3,275,051 673 Cost of Separation................ 665,547 136 Total......................... $4,569,971 $939. While labor turnover cost was estimated at $939 per hire over the 1970-72 period, it varied over a range of from $819 to $1,094. Percent distribution of the aggregate cost of turnover among the four major categories was: less than one percent to recruitment, 13 percent to selection and placement, 72 percent to on-the-job cost, and 14 percent to separation. Shares of the total maintained by the above components remained relatively stable over the 36 month period. For all firms the relationship between labor turnover and cost was decidedly strong. The correlation between the rate of turnover and cost of turnover was highly significant. The relationships between the cost of turnover and the primary categories of worker movement were investigated. Voluntary quits were designated to have had the stronger relationships with labor turnover cost when consideration was extended to cover only the single most influential factor. Layoffs, new hires, recalls and discharges were found to have possessed a significant relationship with the cost of turnover. While voluntary quits and new hires, individually, were observed to have exerted strong influence on the rate of turnover and cost, the main brunt was felt when firms sustained high rates of new hire and voluntary quits in combination. The criteria selected for use in attempting to explain variance in the rate of turnover were wage level, experience required before granting wage increases, distance employees commuted, the level of female employment, firm size, industry type and expenditures for preventive practices. All factors were found to have had some effect upon the rate of turnover when all possible combined factor effects were considered. In a net-effect sense, the level of female employment and firm size were determined not to have weighed significantly upon the rate of turnover. It was concluded that labor turnover in the eastern Arkansas area, and areas of similar characteristics, represents a serious impediment to the efficient operation of the firms. To the extent that labor turnover leads to unnecessary cost and to instability in the labor market, it is felt that efforts to advance rural industrialization are subject to serious setbacks whenever turnover exists at chronically high levels.