What’s Causing Today’s Acute Labor Supply Gaps?
Posted by Darren Findley on Mon, Mar 22, 2021 @ 01:30 PM

We are amid an acute labor shortage. Hiring managers, under pressure to fill positions for skilled and low-skilled workers, are getting increasingly worried. I hear it every day in conversations with Human Resource and Talent Acquisition leaders across industry sectors. Today's labor supply gaps are among the worst I've seen in my 35 years as a recruiting professional.

The Federal Reserve's latest Beige Book report noted "continued difficulties attracting and retaining qualified workers" by many of the U.S. central bank's contacts last month, with labor shortages "most acute among low-skill occupations and skilled trade positions." According to a recent report by the Conference Board, "If left unchecked, today's conditions could easily develop into one of the worst labor shortages of the last 50 years, particularly for companies that employ blue-collar and manual services workers."

In this post, I'll discuss some of the underlying causes of these shortages and share a five-step approach for targeted sourcing that we're using to address these challenges. 

Underlying Causes

How is it that, just as the prospects are beginning to brighten for recovery, we find ourselves with labor supply problems? The shortage of low-skilled workers has been caused, in part, by a drop in labor participation rates during the pandemic. However, the lack of skilled workers, has been brewing for decades, as fewer young people have chosen to enter the workforce in skilled trades.

Reasons for the shortage of low-skilled service workers

  • Nearly three million women have been out of the workforce since September 2020, as those who were furloughed or laid off had to choose between showing up for front-line jobs or caring for their children.
  • Older workers have exited the workforce in droves, including those who left for health reasons and those who retired following a year of record performance in their 401k and retirement accounts.
  • Critics of federal stimulus payments and expanded unemployment insurance argue that low-wage workers who were laid off have not re-entered the workforce because stimulus benefits delivered more income than they earned when employed.

Reasons for the shortage of skilled workers

  • More Americans are going to college and taking professional jobs, while working-class Baby Boomers are retiring en masse.
  • Failure to invest in training and recruiting skilled workers, despite warnings from economists who began sounding the alarm 25 years ago, is a primary reason for the shortage.
  • Restrictive immigration policies have contributed to the shortage of skilled workers, barring the entrance of new immigrants, especially those from Latin America, who have historically helped bolster the applicant pool.

Targeted Sourcing

To succeed in attracting talent amid today's acute labor shortages, you'll need to make fundamental changes in how you recruit. You'll need to move from reactive recruiting, where you post openings and wait for candidates to come to you, to a proactive approach, where you use all of the tools and modern marketing to target and engage both active and passive candidates. Targeted sourcing is about flipping the traditional recruiting funnel from a high-volume, broad-reach program to a targeted approach crafted to appeal to your target audience's behaviors, habits and lifestyle interests. Your goal should be to draw candidates to your specific opportunities because your opportunities fit their lifestyles and career goals. 

The following is a high-level summary of the five steps we use successfully on behalf of clients who request our help in competing more effectively to attract the best-qualified candidates for hard-to-fill roles.

  1. Understand Your Top Performers: Who are the top performers at your company in each of the roles you seek to fill? What makes them top performers? And why are they important to your business? This is the first step in identifying the ideal prospect for your targeted recruiting efforts.
  2. Understand Your Labor Market Trends: What are the geographic, demographic and competitive labor trends that will influence your recruiting success? The most effective recruiting and sourcing professionals have had to become labor data junkies. Understanding where the market is trending, what your competitors are doing and where qualified talent is located can give you a first-mover advantage.
  3. Conduct Focus Groups: Focus groups are a qualitative form of research that can give you insights into the interests, lifestyle choices, preferences, motivators and key competencies of top performers. This information is critical for crafting messaging and creating experiences that will engage candidates and differentiate your job opportunities from those of competitors.
  4. Collect Demographic Data and Segment Your Audience: Understanding who your target audience is, what they buy, where they go and what devices they use will help you determine the right messaging, channels and timing to break through the clutter.
  5. Create a Uniquely Curated Experience: Challenge your marketing team to use all the inputs gathered in the four steps above to get creative in thinking about innovative ways to engage with candidates. Dispense with traditional one-to-many recruitment ads that presume interest on the part of candidates. Think outside the box to create emotional levels of engagement that will differentiate you from other employers. You're not selling a job; you're marketing a new lifestyle choice that may include a better place to raise a family, a lower cost of living or more opportunities for career advancement.

Lastly, I will leave you with this success story...

Bowling a Strike: Years ago, my team was tasked with recruiting 1,200 pharmacy technicians for a Fortune 50 company in a very tight labor market. Our top-performer research revealed that many of the best pharmacy technicians were avid bowlers. We staged recruiting events at bowling alleys in their markets. Our qualification rate went from 29% to 80%, and we saved the client a ton of money, and filled all their roles.

Topics: talent

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