Something very strange is happening in the U.S. job market. Despite a clear boost in post-pandemic job growth (payrolls increased by 916,000 in March 2021), and in April 2021 a record high of nine million job openings in the U.S., businesses in essential worker sectors — fulfillment and distribution, logistics, healthcare, restaurants, groceries, manufacturing, customer services and financial services — are struggling to find people.
According to a March 2021 survey by the National Federation of Independent Businesses, 91% of respondents reported few or no qualified applicants for the positions they needed to fill. And the most recent jobs report was not what economists were hoping for, with payroll employment only growing by 235,000 jobs in August.
Furthermore, the knock-on impact on the economy is potentially devastating. Just as these businesses have made it through the pandemic intact in the worst downturn in living memory, and now can expand operations and revenue-generating opportunities, they are being thwarted by the lack of available people.
So, what is going on here? Let’s try to understand the reasons for this essential worker recruitment challenge and ask what we can do about it.
Why It’s So Hard to Find Essential Workers
Many factors are contributing to the essential workforce talent shortage that is affecting businesses across industries today. Here are four:
Fear of COVID-19
One of the key reasons that people seem reluctant to enter the workforce right now is COVID-19. A U.S. Census Survey, taking place in the second half of March 2021, found that 4.2 million people aren’t working because they are afraid of getting or spreading the virus. A June 2021 Korn Ferry Survey found that half of U.S. professionals are afraid to return to the office. Businesses on the frontline, such as restaurants, retail, and health, are likely to be particularly impacted by this.
Concern levels also differ along gender, race, and ethnicity lines. According to Pew Research, women (60%) are more likely than men (48%) to be concerned about being exposed to the virus. African American (70%) and Hispanic (67%) workers are more likely to be concerned than Caucasian workers (48%).
In such cases, there is a feeling that potential hires may only return to work when the conditions are right.
Generous employment benefits?
Another possible reason for the difficulties businesses have in hiring is what are perceived to be generous unemployment benefits, increased by the Biden administration stimulus and part of a $1.9 trillion COVID-19 pandemic relief package approved in March 2021.
In higher-paying states, benefits can be up to $600 per week with many potential employees now earning more through benefits than they did in their previous jobs.
However, this is unlikely to be a key driver for long with several state governors having already cut off this federal aid and the whole program due to end this month.
A recent report by the National Bureau of Economic Research showed that a 10% increase in unemployment benefits would lead to just a 3.6% decline in applications. Reducing unemployment benefits is not a complete solution to recruitment challenges.
According to our research of current job seekers, while 66% of those surveyed reported that they receive stimulus payments, only 16% are currently receiving employment benefits.
The challenge of childcare
There are other challenges in returning to work as well. Many potential employees, for example, are struggling to find childcare as businesses reopened during school vacation time. One-third of the U.S. workforce, or an estimated 50 million workers, has a child under 14 in their household.
In such cases, many families have had to take the option of having one rather than two incomes. A national panel survey of 2,500 working parents found that nearly 20% of working parents had to leave work or reduce their work hours due to a lack of childcare, with only 30% of all working parents having any backup form of childcare.
Whether this will change with children returning to school remains to be seen.
A more discerning workforce
Perhaps the final reason, however, is that we have a more demanding workforce, in areas such as remote working and wages.
Industries which require in-person work, such as construction, retail, restaurant, and warehousing, are currently struggling to recruit. People want to work remotely, but if you look at Zip Recruiter marketplace, only one in ten job postings tend to offer remote working as an option. The result is a mismatch in filling jobs.
Wages are another issue where there are rising worker demands. Jobs paying $15 an hour, but come with high-stress, inflexible hours, and few benefits, are simply not attractive enough to potential applicants. Employers need to provide a more attractive package to hire successfully.
What We Can Do to Navigate This Difficulty in Hiring
How can we address these challenges and get better at attracting essential workers? Here are four strategies recruiters can use for success.
Get better at finding the right people — leverage technology
One of the key factors behind the long-term sustainability of the job market is being smarter and more innovative in finding the great candidates that are still out there. This also requires being able to hire at scale, even if it means overturning traditional recruitment approaches.
One of the challenges to recruitment, as already illustrated, is that potential employees have specific demands regarding remote work, for example. The more specific the requirements, the more customized recruitment campaigns must be.
This is where technology comes into play. The growth in advanced artificial intelligence algorithms, multiple data points and machine learning, can help provide more efficient matching between job seekers and employers, instantly searching through reams of data to find candidates who meet the right search criteria.
Technology is also leading to the growth and diversification of recruiting channels, the incorporation of social media and text messaging into candidate outreach, and even virtual reality candidate engagement efforts.
As artificial intelligence, data analytics, machine learning and greater automation progresses, it is clear that technology will have a major impact on recruitment and the job market for years to come.
Develop better ad targeting and be more specific at promoting jobs
Technology can also play a significant role in helping business create stronger, better targeted ads, with instant feedback mechanisms. Recruitment requires a consumer marketing approach where job advertisements are as well targeted and honed as consumer products on platforms such as Amazon and Facebook, as well as niche sites. That way employers can find the candidates they most want to hire, and candidates can find the employers they most want to work for, wherever they are already spending time online.
While job distribution services and programmatic vendors use buying rules to determine which sites to appear on, an AI-driven approach can go even further by using candidate behavior, job requirements and bidding rules to reach the right candidates. Technology like this gets better with each interaction, learning which jobs people are most likely to interact with and matching job seeker activity with available jobs, thus, delivering unique job ads and search results to people based on their individual job seeker behavior.
The wide variation in job opportunities in different regions across the U.S. — with some areas booming and others not — make it even more important to avoid a one-size-fits-all, traditional job profile and advertising approach. Different approaches are required in different markets with technology being the great enabler.
Employers also need to get more transparent at explaining what a job entails when it comes to responsibilities, benefits, etc. Vague job descriptions tend to result in two things — people who would be a good fit not applying due to being unable to recognize that the job would complement them, and people who aren’t a good fit applying because the advertisement is not clear enough.
Other drivers that can help recruitment include better branding and a more consistent presence across multimedia channels. This can lead to increased employer-branded recognition and more serious job candidates.
Create a more attractive, flexible and safe workplace
There are other practical and creative things that any business can do to incentivize potential employees. For example, be clear as to how the workplace is safe to counter the concerns many people have in going back to work. Be flexible over working hours around children’s school schedules and give employees the ability to work from home and design the workspace accordingly (although in many sectors, working from home is not an option).
Recent research from the American Economic Association found that the average worker is willing to give up 8% of their wages if they have the option of working from home. Many companies are rising to the challenge. According to Pew Research, more than 66% of companies are considering redesigning their offices for hybrid work environments.
Sign-on bonuses are no substitute for higher wages. Our research at Talroo found wages as the number one thing job seekers are looking for in their searches, with 39% citing it as the most important factor. Not all companies can afford to increase wages significantly and are arguing against the proposed $15 an hour minimum wage. Others, such as Amazon and McDonalds, have recently provided substantial pay increases.
Expand the recruitment net
In a December 2020 article in Harvard Business Review, the term ‘hidden workers’ was used — the people, such as veterans, care givers, older workers, or people with disabilities, that tend to fall outside the traditional recruitment net. The article posed the question of how can we identify them and encourage them to transition back into employment?
For example, should we focus more on recruiting people to sectors that are new to them and focus on how they can acquire the necessary skills? In a recent report, McKinsey predicts that more people will need to transition to new, often higher-wage jobs in the post-COVID-19 world.
Research also shows that women tend to switch jobs less frequently and are a more reliable source of employment, so special effort should go into working around childcare responsibilities and the work/life balance they require. Better support structures need to be put in place for women at work, such as increased childcare subsidies as employee benefits and on-site childcare options.
How Recruiters Will Overcome the Challenge
What is clear is that employers need to be better than ever in attracting talent. It’s only through being proactive and embracing the latest technologies that employees can start to take on essential workers at scale and ensure that the U.S. post-pandemic economic recovery reaches its full potential.