The Price of Unpredictability: Cost Savings for Businesses Under HB23-1118

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In this report, the Colorado Fiscal Institute analyzed how a Fair Work Week would affect workers who are employed by companies with 250+ employees. Our analysis found:

• A 2022 study demonstrates that greater schedule instability is a strong predictor of high turnover for workers, and this is especially true for workers in sectors like retail and food service included in House Bill 23-1118 (Colorado Fair Workweek). Colorado workers in these industries report multiple types of instability measured by the study, including last minute scheduling, canceled shifts, and “clopenings”  (working back-to-back closing and opening). These forms of instability lead to high rates of dissatisfaction, poor health outcomes, and economic hardship, which translates to higher churn amongst employees exposed to unpredictability. 

• The researchers draw on new Harvard Shift Project data from hourly workers in retail and  food service to demonstrate that turnover rates are 50% higher for workers with exposure  to over three types of scheduling instability, relative to those with no instability. 

• Turnover for employees with less than a week of advance notice of their schedules was almost 35% (9 percentage points) greater than those with 2 weeks advance notice. 

• Workers who experienced shift cancellations experienced a 38% higher turnover rate.

• High turnover is costly for Colorado businesses’ bottom lines; an analysis of 22 case studies from relevant research on the costs of turnover found that it costs businesses about one-fifth (20%) of a worker’s annual salary to replace that worker. 

• CFI’s analysis used Quarterly Workforce Indicator data on employment, wages, and quarterly turnover to estimate the policy impact in the the industries covered by the Fair Work Week bill proposed in the 2023 legislative session. Across all covered industries, fair scheduling would save Colorado businesses nearly $130 million in turnover costs annually.

• The proposed bill would produce nearly $85 million in savings for Colorado’s retail industry, over $30 million for food services establishments, and over $12 million for food manufacturing establishments.

• These cost savings do not account for the improvements to worker productivity and organizational performance resulting from better worker retention, or the economic spillovers of putting more dollars into the hands of working people, which will boost shared economic growth across the state. Once understanding these impacts, relative to the costs of adjusting to the new regulatory framework proposed in the bill, CFI estimates a positive impact on net revenue for impacted Colorado businesses.

Read the full report here

Read our one pager with some of the most relevant data