An unusual phenomenon is happening in the United States. Even though 6.9 million jobs are available, 6 million Americans are unemployed, according to the Bureau of Labor Statistics (BLS). Despite there being more jobs than people to fill them, businesses are struggling to secure new workers, and this disconnect has employers scratching their heads.
“Business’s No. 1 problem is finding qualified workers,” Mark Zandi, chief economist at Moody’s Analytics, said in a press release. “At the current pace of job growth, if sustained, this problem is set to get much worse. These labor shortages will only intensify across all industries and company sizes.”
From May to June of this year, the private sector added 177,000 payrolls, including 40,000 jobs in the financial activities and professional/business sectors, according to ADP Research Institute’s “National Employment Report.” This growth shows no signs of slowing. The BLS predicts that employment will increase from 156.1 million to 167.6 million by 2026.
How do we explain the disconnect between the millions of available jobs and the large number of unemployed job seekers who aren’t taking them?
One major factor is that baby boomers are transitioning into retirement, leaving behind a multitude of open positions. That, coupled with a low unemployment rate and rapid job growth, leaves companies struggling to fill all their open roles. According to a 2018 CareerBuilder survey, 45 percent of HR managers can’t find qualified talent for their available positions.
One employment expert says businesses — which were used to having their pick of a job-deprived labor force during the 2008 recession and in the years following — need to adjust to the new conditions and find creative ways to recruit.
“Wages have not gone up despite all the talk about a tight labor market,” Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School, told NPR. “And I think most important for the economy, we still don’t see lots of employers being willing to take people in right out of school and train them for jobs.”
In fact, many companies are unwilling to spend time and money training new hires. This isn’t surprising, considering the organization might spend 6-9 months’ worth of the employee’s salary to locate and train a replacement if the employee leaves, according to Quantum Workplace.
This is where alternative talent acquisition comes in. Some organizations, like Workforce Opportunity Services, specialize in sourcing, training, and placing talent from underrepresented groups. The efforts of these organizations create supplies of talented candidates who have the skills and competencies employers are searching for, while also helping those who may not have access to traditional education and job training find employment.
Even with the steady improvements to US unemployment rates across all demographics, Black and Hispanic Americans still face higher than average unemployment of 6.5 percent and 4.5 percent, respectively. Overall unemployment numbers do not account for disproportionately affected populations or the 4.6 million young adults who are disconnected from stable career pathways. With the right mentorship, support, and training, these populations can be developed into skilled laborers who can fill vacant positions in industries that are struggling for talent.
Companies with more diverse workforces tend to surpass the performance benchmarks of more homogeneous organizations. A team composed of members from different backgrounds and with different perspectives is a more cognitively diverse team, which leads to improved problem-solving and enhanced innovation.
The labor market may be tightening for corporate America, but by turning to alternative talent acquisition, employers can offer viable careers to the underrepresented yet skilled workers in the market while filling critical roles and maintaining their competitive edges.
Arthur Langer is chairman and founder of Workforce Opportunity Services.