Hiring Overlooked Talent May Help Ease the Worker Shortage

Small businesses are experiencing the impact of the labor shortage. Discover how to identify and recruit employees from hidden talent pools.

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Employers’ complaints about the labor shortage aren’t new. Business owners have griped about not having enough workers since the European Peasants’ Revolt in 1381. Fast forward to the pandemic, and those cries for more workers have escalated.

Although COVID-19 is credited with driving masses of workers out of the labor force in the Great Resignation, economists think the worker shortage began before the pandemic. Nevertheless, many of those who quit their jobs are now re-entering the workforce, just not in the same lines of work.

Workers’ re-entry into the labor market should create hiring opportunities for employers, especially small- and medium-sized businesses (SMBs). However, a report by Accenture and the Harvard Business Review shows that these aren’t the only candidates up for hire.

The Hidden Workers report: Benefits of hiring hidden talent

In Hidden Workers: Untapped Talent, researchers found that 27 million potential workers in the U.S. are “hidden,” or overlooked. They’re not deliberately hiding, they’re just not the traditional job candidates that employers are used to recruiting.

Employers who hired hidden talent said that these workers outperformed other employees in 6 key areas: productivity, work and attitude ethic, work quality, attendance, engagement, and innovation.

Can tapping into this hidden talent pool ease the worker shortage? Possibly. The Hidden Workers report revealed that employers who hired hidden talent were 36% less likely to experience worker shortages than employers who didn’t.

In addition, the employers who hired the hidden talent said that these workers outperformed other employees in 6 key areas. Those areas were productivity, work and attitude ethic, work quality, attendance, engagement, and innovation.

Based on the report, employees can help ease the worker shortage by:

  • Identifying hidden talent pools and learning how to recruit these nontraditional job candidates.
  • Revising hiring practices to attract diverse applicants.
  • Rethinking job qualifications for certain openings.

So, what’s causing the worker shortage, and how is it affecting SMBs? The answers could make the case for why employers should hire hidden talent.

What are the reasons for the worker shortage?

Economists attribute today’s labor shortage to:

Job/worker mismatch

Research by the International Monetary Fund (IMF) cites the mismatch between available jobs and the people who are willing to fill them as a major cause of the worker shortage.

Aging workforce

The number of people aged 55 and older has doubled in the past 20 years, according to the BLS. Businesses can expect more people to retire in the next few years.

Childcare needs

According to the U.S. Census Bureau, the labor force lost 1.4 million working mothers in 2021 — a 66% increase from 2020 — due to the high cost of childcare.

Immigration restrictions

The population of immigrant workers decreased by 2 million in 2021. This was because of work-allowance and travel restrictions.

Retirement

The Institute for Economic Equity estimates that 3.3 million people retired in 2021, a 7% increase over 2020. At the same time, many older people and retirees reportedly will keep working because they want or need the income.

The Great Resignation

A big part of the current labor shortage is the mass exodus of 44 million workers who voluntarily quit their jobs during the Great Resignation in 2021. The reasons for quitting vary. However, the Pew Research Center cites a shift in the way people view how, where, when, and why they work as a major cause.

COVID-19

Besides causing illness and death on a global scale, the pandemic also set off economic chaos that helped fuel the labor shortage.

The labor shortage hit all businesses, but SMBs were hit the hardest in many cases.

What are the labor shortage problems for SMBs?

More than half of SMB owners (51%) in a May 2022 report by the National Federation of Independent Business (NFIB) said they had job openings they can’t fill.

The report also showed that although 67% of business owners filled or tried to fill job openings, an 8-point increase from April’s figures, 92% of them found few or no qualified people to hire.

Besides releasing reports like this, NFIB supports rolling back legislation it believes intensifies the labor shortage for SMBs.

Other recent reports show that the labor shortage has forced SMBs to:

  • Cut back services.
  • Turn away customers.
  • Lose revenue.
  • Cut operating hours.
  • Lose talent to bigger businesses.

Regardless of who’s not available for hire and why, SMBs must keep their staffing numbers at a certain level or risk shutting down.

What’s your biggest 2022 HR challenge that you’d like to resolve

Answer to see the results

The case for why employers should hire hidden talent

Employers must keep recruiting as necessary. However, to hire, they may need to look for talent where they’ve never looked before. Baruch Labunski, CEO of Rank Secure, a tech firm specializing in search engine optimization (SEO), agrees.

“Companies can find underserved people to recruit for employment but need to spend some extra time to reach those communities,” Labunski wrote in an email to Workest. “Many non-profits deal specifically with the disabled, veterans, the formerly incarcerated, retirees, and unskilled workers. Company officials may need to visit these places to post job openings the old-fashioned way: on a bulletin board, as well as online on each organization’s website.”

According to Ximena Hartsock, Ph.D., founder of BuildWithin, a company that identifies, trains and manages tech-related apprentices, there are 1 million unfilled technology jobs in the U.S. today. Her company is preparing workers to help fill those positions by engaging with diverse talent pools, such as retirees, neurodiverse groups, and veterans.

Why do employers overlook certain talent pools?

With such an acute labor shortage and a broad range of available talent pools, why aren’t employers shifting their recruiting practices to fill jobs? In an email to Workest, Corey Berkey, senior vice president of People & Talent at Employ Inc., a multi-brand talent acquisition, explained why.

“Those in talent acquisition may have established what an ideal candidate looks like and where [to] find them, excluding a broader set of candidates through unnecessary filtering at the top of the applicant funnel,” Berkey noted. “Building programs to attract, engage, and hire underrepresented groups through strategic audience planning is considered a leading practice, according to the EVOLVE™ Talent Acquisition Framework. Following this methodology can allow businesses to cast the broad net, promote diversity, and zero in on qualified candidates.”

Josh Millet, founder and CEO at Criteria, a tech firm offering hiring solutions, told Workest via email that many employers still use traditional hiring methods that often misrepresent candidates’ abilities and curb their diversity, equity, and inclusion (DEI) efforts.

“For example, many organizations are still completely reliant on the 2 oldest and most common hiring resources available: resumes and unstructured interviews. These resources are notoriously prone to bias because they often give recruiters a superficial picture of a candidate’s skills and other traits,” Millet noted. “This causes resume reviewers and interviewers to fill in the blanks with their own subjective impressions and sometimes even their prejudices.”

To help ease the worker shortage, SMBs can start looking for talent in all the “hidden” places. These include talent pools of people they may not have considered hiring before or even know how to recruit.

What are the talent pools employers are overlooking?

A number of overlooked talent pools have sponsors, organizations, or government agency advocates who can vouch for their members’ job readiness. They can also vouch for their members’ eagerness to work and capabilities.

Here are some of the top overlooked talent pools.

Formerly incarcerated individuals

According to the Association of Equipment Manufacturers (AEM), ex-incarcerates make up one of the largest but least tapped talent pools. Their numbers are likely greater than most people think, since about 70 million, or 1 in 3, American adults have a criminal record.

Although the number of people with criminal records includes people that haven’t been imprisoned, it could more than fill the 2.4 million manufacturing jobs that AEM expects will be vacant. As an advocate for ex-offenders, the organization has an AEM Workforce Solutions Toolkit. It has information and resources for recruiting and hiring ex-incarcerates.

Research by Workers with Criminal Backgrounds and the Society for Human Resource Management (SHRM) found that 3 in 4 survey participants said they felt comfortable with employers hiring ex-felons. Slightly more approved of employers giving ex-offenders a 2nd chance at living productive lives.

This kind of support from their communities helps ex-offenders succeed. They generally have successful work records because they try extra hard to perform their jobs well. They also try to change people’s perception of them, according to the advocacy organization Prison Fellowship.

Ex-incarcerates also receive government support. This support is in the form of state-sponsored skills training programs and $260.3 million in grants for re-entry initiatives from the U.S. Department of Labor (DOL).

People with disabilities

According to the Centers for Disease Control and Prevention (CDC), 61 million American adults — 1 in 4 people — are living with a disability. This talent pool includes people with physical, emotional, and developmental impairments.

Employers are credited with stepping up their recruitment of people with disabilities. However, employment for this population still falls short of advocates’ expectations.

For instance, the National Organization on Disability (NOD) reports that among Americans over 16 with a disability, only 21.3% are working or actively looking for work, compared to 67.1% of Americans who don’t have a disability.

To help employers tap into this often overlooked talent pool, The Small Business Administration has a guide for hiring employees with disabilities.

Title VII of the 1964 Civil Rights Act and the Americans with Disabilities Act (ADA) protect people with disabilities against discrimination in recruitment, hiring, and treatment on the job.

Neurodiverse candidates

Understood.org, an advocacy organization for neurodiversity, describes neurodiverse people as those who think and interact with the world differently from others. Neurodivergent conditions include dyslexia, autism, and attention-deficit/hyperactivity disorder (ADHD).

About 70 million people are neurodiverse. According to Understood.org, when neurodiverse people feel supported and understood, they thrive by becoming self-confident and finding meaningful work. Employers would benefit from hiring more neurodivergent employees.

Long-term unemployed

People who have been out of work 27 weeks or longer make up more than 40% of the total unemployed population in the U.S.

Many people in this category worked in the construction industry or held construction jobs, according to an Urban Institute report. A number were laid off during economic downturns, like the Great Recession in 2008. And like short-term unemployed workers, they sometimes grew discouraged and stopped job hunting.

Glassdoor recommends that employers avoid letting employment gaps like long-term joblessness keep them from considering this talent pool. According to the job board platform, these potential job candidates often have valuable skills, want work they care about, and can be successfully integrated into the workforce.

Military veterans

Corporations used to give hiring preference to veterans because of their leadership and collaborative skills. However, veterans make most lists of overlooked talent because employers don’t always know how to actively recruit them.

Today, employers can find information and resources for hiring ex-service people online at such sites as RecruitMilitary and Glassdoor.

For hiring ex-service people, the Department of Veterans Affairs offers employers incentives.

Apprentices

The Brookings Institution describes apprenticeships as long-term paid programs that provide training-based work opportunities.

Hartsock describes this talent pool as “a high-quality career pathway that has existed formally in the U.S. since 1937, but just recently began being used for positions outside trade positions, including a variety of technology roles where existing skills can be easily transferred. Apprenticeships offer companies the opportunity to engage different job candidate populations, including underserved communities.”

Employers may register their apprenticeship programs through the DOL’s Office of Apprenticeship or a state-sponsored apprenticeship agency. Registration sets quality standards for program participants.

Contractors

Hiring workers as needed saves employers the cost of benefits, overhead, and other employee-related expenses. These expenses add up for SMBs trying to stay within a budget, lower costs, and remain competitive.

What are additional hidden talent pools recruiters can consider?

Workers who employers don’t recognize as a talent pool or may never have considered hiring or rehiring include:

Current employees

Recruiters may not think of employees as a talent pool because they’re already onboard. But not considering them for openings they could readily fill through a lateral move or promotion prolongs time-to-hire. It also perpetuates the labor shortage in the process.

Berkey said that companies should consider internal mobility and make current workers part of their hiring strategy. “Hiring internally means fewer resources to hire, onboard, and train new employees. However, many companies aren’t prioritizing internal mobility,” he noted. “In fact, 54% of workers actively looking for a job have not even looked at their current company, according to the recent Employ Inc. report.”

Berkey added that hiring teams can improve internal mobility by “building a better internal candidate experience and application process, using AI and machine learning to identify at-risk employees, and communicating open positions to employees, among other initiatives.”

Retirees

Employers downsize by offering retirement-age workers separation or early retirement packages. But with runaway inflation and the cost of living skyrocketing, retirees who joined the Great Resignation are remaining in or re-entering the workforce. And employers are welcoming them back due to the worker shortage.

To help ease the worker shortage, the IRS announced that it won’t jeopardize the tax status of employers’ pension plans if they rehire retirees or allow distributions of retirement benefits to current workers who reach age 59½ or the plan’s normal retirement age.

Customers

Patrons may not seem like a talent pool. However, their knowledge of a business and loyalty to its products or services may make them exceptional job candidates.

Caregivers

Hidden talent pools include people who may have left their jobs to care for young children or aging adults but want to return to work when their caregiving duties are over.

What are additional overlooked traditional talent pools?

Employers shouldn’t overlook traditional talent pools for consideration when hiring. Applicants who still face exclusion from hiring include:

  • Black, Hispanic, Asian, Native American, and Pacific Islander applicants
  • Women
  • Older workers
  • Members of the LGBTQIA+ community
  • Religious groups

Like people living with disabilities, members of these talent pools are protected against discrimination in recruitment, hiring, and treatment under Title VII.

Consider a shift in required work qualifications

Along with broadening candidate pools to ease the labor shortage, employers may need to rethink their requirements for certain jobs. For example, recruiters must decide whether a 4-year degree is necessary for a job opening or if on-the-job experience suffices.

Recruiters must decide whether a 4-year degree is necessary.

Berkey believes that employers shouldn’t rule out candidates whose credentials aren’t an exact match for a job. “Within the hiring landscape, some hidden workers are eager to work but are often overlooked by companies due to their background,” he noted. “Perhaps their previous work experience does not align with the company or the exact job description, but that shouldn’t mean they aren’t a fit for the job.”

He also advised employers to avoid using language in job descriptions and interviews that exclude diverse applicants.

Consider partnering with advocacy organizations

SMBs don’t have to expend enormous time and limited resources to find and hire candidates from hidden or overlooked talent pools. They can partner with or tap into the resources of advocacy organizations that champion the employability, as well as the health, well-being, and financial support, of underserved people.

One of the oldest organizations is Easterseals. The nationwide organization has been advocating for people with all types of disabilities for 88 years. It serves 1.5 million people of all ages annually.

New Jersey’s Easterseals published a guide to help more employers hire people with disabilities. “Easterseals NJ’s Inclusive Hiring Guide” is a reference handbook and educational tool that raises awareness of the broad range of disabilities, both apparent and less visible. The handbook offers guidance on recruiting, interviewing, and onboarding.

“Companies of all types and sizes need to become informed and motivated to actively recruit people with disabilities. We’re jumpstarting the process by showing the real benefits and breaking down the barriers,” said Easterseals NJ CEO and President Brian Fitzgerald in a press release. “We know that employers across New Jersey have good intentions to hire people with disabilities, but too many still aren’t doing it. We want to help turn their good intentions into action.”

The takeaway: How hidden talent can ease the worker shortage

Often backed by organizations and government agencies, hidden talent pools have people who are ready and able to work. SMBs struggling to find workers can partner with their backers to find qualified, dependable candidates.

Employers can take advantage of tax incentives for hiring largely overlooked talent.

Employers also can help ease the worker shortage by recruiting from the pool of workers who are quitting their jobs and looking elsewhere for employment. Referring to his company’s 2022 Job Seeker Nation Report, Berkey said that 23% of workers changed industries for higher pay and better work/life balance.

He added that: “Companies have an opportunity to take advantage of talent pools of workers from different industries or skill sets. They may have diverse professional backgrounds or gaps in their resumé, but [employers should] consider their soft skills and ability to adapt and learn quickly.”

Finally, employers can take advantage of these tax incentives for hiring largely overlooked talent:

Work Opportunity Tax Credit (WOTC) for hiring people from groups that regularly face employment barriers.

Barrier Removal Deduction, which lets businesses deduct up to $15,000 for improving a facility’s or public transportation vehicle’s accessibility.

Disabled Access Credit, a non-refundable credit for SMBs that accumulate expenses when providing accessibility to people with disabilities.

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