The Contractor Turnover Treadmill — 73% Annual Turnover and $12,800 Per Departure

You Hired 10 People Last Year and Grew by Zero

Nearly half of contractors — 46% — increased headcount in 2025 and ended the year with zero net workforce growth. They recruited, interviewed, onboarded, trained, and paid signing bonuses. Then they watched people walk out at the same rate they walked in.

Bridgit's 2026 workforce data tells the full story: 71.7% of contractors added headcount last year. The median attrition rate was 18.7%. For non-senior roles, it climbed above 18%. Only senior PMs held steady at 3.6%. Everyone else churned.

This is the treadmill. You're running as fast as you can and staying in place. And the financial cost is far higher than most contractors realize, because it's not just recruiting expenses — it's the margin destruction that happens every time a $76/hr journeyman gets replaced by a $39/hr apprentice for two months while you scramble to backfill.

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The Turnover Numbers by Role

Annual turnover rates in construction vary dramatically by skill level, and the pattern is predictable: the easier a role is to leave, the faster people leave it.

General laborers turn over at 89.3% annually. That's not a retention problem — that's a revolving door. Skilled trades sit at 73.1%, which means roughly three out of four electricians and plumbers on your payroll today won't be there in 12 months.

The project type matters too. Renovation and remodeling crews experience 91.7% turnover — the worst in the industry. Residential sits at 82.4%. Commercial is 71.6%. Infrastructure is the most stable at 63.8%, likely because of union structures and longer project timelines. If you're running residential remodel work, you're essentially rebuilding your crew every year.

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What Each Departure Actually Costs

Most contractors think of turnover cost as the recruiting expense. It's not even close. The real cost includes recruiting, onboarding, training, lost productivity during ramp, and the billing rate gap while the seat is filled with a less-skilled worker.

A skilled tradesperson costs $12,800 to replace — and that's before you account for the 8-12 weeks of reduced output while they ramp. A project manager costs $45,300 and takes up to 20 weeks to reach full productivity. That's five months of a PM operating below capacity on your most complex jobs.

And these are conservative numbers. A $30/hr tradesperson costs $55-$60/hr fully loaded — over 150% of base pay — once you factor in payroll taxes, workers comp, benefits, truck, tools, and training. The cost of hiring a new tech runs through the full build, and it's consistently six figures annually for a journeyman-level hire.

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The Math on a 20-Person Crew

Let me make this tangible. Take a 20-person field crew with the industry median 73% skilled trades turnover rate. That's roughly 15 departures per year.

Direct replacement costs: 15 departures x $12,800 = $192,000

Billing rate reduction during backfill: When a journeyman leaves and you temporarily fill the slot with an apprentice, you lose the margin spread. From our bill rate benchmarks by skill level, journeymen bill at $76/hr and apprentices at $39/hr. If each departure creates a 6-week gap at the lower rate:

15 x 6 weeks x 40 hours x ($76 - $39) = $133,200 in lost billing

Total annual cost of turnover: ~$325,000

That's $325,000 per year on a 20-person crew — gone to churn. Not invested in equipment, not paying down debt, not improving margins. Burned on the treadmill.

For context, our data across 2,242 contractors shows the median bill rate is $79/hr and top-performing techs generate $180K-$280K in annual revenue. Every journeyman departure is a $43/hr margin engine going dark for 8-12 weeks while you replace it with a $16/hr margin engine. The utilization benchmarks compound the problem — a new tech running at 70% utilization during ramp versus a veteran at 96% means you're losing on both rate and volume simultaneously.

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The Industry Shortage Makes It Worse

This would be painful in a normal labor market. In this one, it's devastating.

The construction industry needs 349,000-499,000 net new workers in 2026-2027. That's on top of replacing departures. 92% of firms report difficulty finding qualified workers. 45% cite labor shortages as their leading cause of project delays — not materials, not permitting, not financing. People.

When your journeyman leaves for $2/hr more across town, the replacement timeline isn't 2-3 weeks. In this market, it's 6-12 weeks for a skilled tradesperson, and some positions go unfilled for months. Every week that seat is empty is another week you're either turning down work, sending a less-qualified tech, or paying overtime to cover the gap.

The bottom 25% of contractors in our dataset generate only $80K-$120K in revenue per technician. The top 10% generate $180K-$280K. That spread is partly bill rate and partly utilization — but it's also tenure. Experienced techs who know your systems, your customers, and your dispatch patterns simply produce more revenue per hour than someone in their first 90 days.

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Where Retention Has Actual ROI

The math is clear: reducing turnover from 73% to even 50% on a 20-person crew means roughly 5 fewer departures per year. That saves:

• 5 x $12,800 = $64,000 in direct replacement costs
• 5 x 6 weeks x 40 hours x $37 spread = $44,400 in preserved billing
• $108,400 in annual savings from a 23-point improvement in retention

The levers that actually move retention aren't complicated, but they cost money — and the question is whether the investment pays back. Based on the data:

Compensation bands matter more than total comp. Senior PM attrition is 3.6% versus 18%+ for non-senior roles. The difference isn't just money — it's clear progression. Techs who can see the path from apprentice ($39/hr bill rate) to journeyman ($76/hr) stay longer than those who feel stuck. Transparent pay progression tied to skill levels and certifications gives your workforce a reason to vest.

Schedule predictability reduces churn. Our scheduling benchmarks show the link between overtime patterns and workforce stability. Chronic overtime drives departures. So does chaotic scheduling. The contractors in our dataset with the tightest utilization ratios — those running at 90-96% without spilling into chronic OT — tend to hold people longer because the workload is sustainable.

The cost of a raise is less than the cost of a replacement. A $3/hr raise for a skilled tradesperson costs $6,240/year. Replacing that same tradesperson costs $12,800 plus $8,880 in billing rate reduction during the gap. If the raise has even a 50% chance of retaining the employee for an additional year, it's net positive.

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The Honest Assessment

If you're a $3-10M contractor, turnover is probably costing you $150K-$500K per year depending on crew size and trade mix. You're spending it whether you track it or not. The difference between contractors who manage it and those who don't is visibility — knowing the number, knowing which roles churn fastest, and knowing whether your retention spending actually produces ROI.

The treadmill only stops when you start measuring it.

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Q: How does Level help with turnover cost analysis? A: We connect to your payroll, field service software, and accounting data to calculate actual turnover cost by role — including the billing rate gap, productivity ramp, and recruiting spend. Most contractors are shocked by the number. The first audit is free, and the turnover analysis is part of it.

Q: What turnover rate should I target? A: For skilled trades, getting below 50% annual turnover puts you well ahead of the 73% industry median. For PMs and supervisors, target below 25%. Zero turnover isn't realistic or even desirable — some churn is healthy. The goal is reducing expensive, avoidable departures of trained, productive technicians.

Q: How do I calculate my own turnover cost? A: Start with the number of departures in the last 12 months. Multiply by the replacement cost for each role (use $12,800 for skilled trades as a baseline). Then estimate the billing rate gap — how many weeks each seat was filled by a lower-skilled worker or left empty, and what that cost in revenue. Add the numbers. That's your floor, because it doesn't include the customer relationship disruption or the overtime paid to cover gaps.

Q: Is it better to invest in retention or just hire faster? A: Retention, and it's not close. Hiring faster in a market with 349,000+ unfilled positions is a losing strategy — you're competing with every other contractor for the same shrinking pool. A $6,240 annual raise costs less than half of one $12,800 replacement. Invest in keeping the people who already know your business.