High Demand and Hidden Supply

Companies across the board are increasingly desperate to find the right talent–but because of outdated hiring practices, employers may be their own worst enemy.

At the same time, millions of people are struggling to find work during a historically tight labor market. There’s a disconnect between those two patterns, but this creates an opportunity for companies who can recognize it.

According to research from the Managing the Future of Work Project at Harvard Business School, a broad cross-section of individuals in the US and Europe are eager to get a job or work more hours, but they are excluded from the employment they seek because of companies’ own hiring practices.

For their research, the report’s authors conducted a survey of over 8,000 workers and over 2,250 executives from the US, the UK, and Germany. Its authors estimate there could be as many as 27 million of these “hidden workers” in the United States, and millions more in Europe.

That’s not to say these workers are themselves hiding from employers. Quite the opposite: these are individuals who want to work, but have somehow been blocked from employment because companies fail to see what their applicants can bring to the table. The problem is that these workers are hidden from the hiring practices most employers use.

While most of the report’s information, including the worker survey data, was collected in 2020, the trend toward a labor shortage has continued since then. The US is going through an unprecedented shortage of workers, with only 58 unemployed people for every 100 job openings. In addition, the factors examined in Emsi Burning Glass’s Demographic Drought report show that worker shortages may become a permanent feature of hiring patterns. In such a difficult job market, finding hidden workers promises to be an increasingly high priority for employers.

There are three main categories within the hidden worker umbrella:

• Those missing hours (workers employed part-time but wanting to work full-time)

• Those missing work (unemployed but still seeking employment)

• Those missing from the workforce (people who are not working or actively looking for work, but still open to employment under the right circumstances) 

Each of those categories, and the category of hidden workers as a whole, represent a hugely diverse pool of individuals. Many lack traditional qualifications or come from underrepresented communities, while others carry challenges like physical or mental disabilities, a criminal record, or responsibilities as a caregiver.

Because there are so many of these workers, representing so many demographics, their potential re-absorption into the workforce could have a massive impact on the labor market.

So what are the obstacles preventing hidden workers from being hired—and how employers overcome them?

• Job descriptions are outdated.

  • Often, recruiters add new skills, experience, and education requirements to existing job descriptions, rather than starting from scratch. That may save time for the company, but doesn’t serve its best interest. Applicants need to know exactly what a job will require, and that starts with an accurate job posting with must-have skills, not one loaded down with legacy or “nice to have” requirements and attributes.

In 2021, a collaborative report by Emsi Burning Glass and The Conference Board showed employers are attempting to combat labor shortages by rethinking their job descriptions— for example, dropping degree requirements and adding their own employee training programs.

• Applicant Tracking Systems are calibrated inefficiently.

  • When most ATS software platforms sort a pool of applicants, it uses “negative” logic to filter out those who lack required skills. In other words, the system looks for reasons (like gaps in employment history) to knock applicants out of contention. This provides the hiring team with a solid pool of candidates, but it excludes countless others who may still be a good fit. At a time when companies are in a dogfight for talent, that’s not always the best choice. An “affirmative” ATS logic ranks potential employees by the abilities and skills they do possess, a configuration that will often be more efficient and inclusive.

Businesses continue to put more focus on diversity, equity, and inclusion, but as an employer, your motivation in expanding recruitment should go beyond corporate citizenship. This is a competitive advantage. Finding and hiring hidden workers alleviates skill shortages, diversifies your workforce, and puts you in a position to succeed well into the future. 

For more research on the challenges facing employers (and how to solve them), read our 2022 Talent Playbook and check out our resources for corporate talent strategy.