6 ways to overcome the labor shortage and attract candidates

Last updated:
April 19, 2022
May 27, 2022
min read
Szonja Zsiros
labor shortage
Table of contents

At the onset of the pandemic in early 2020, layoffs were the norm as businesses struggled to stay afloat. Interestingly, the next year saw businesses experience an unexpected labor shortage.

In the mix of the current labor shortage is the rise of the anti-work movement, employees seeking more flexibility, higher childcare prices, and a mismatch between open jobs and workers. 

Before we get into strategies to retain and attract employees in a labor shortage, what exactly is the labor shortage, and what caused it?

What is the labor shortage? 

The current labor shortage means there's a gap between the labor needed and the number of people available to provide this labor. In other words, there are more jobs than people available, willing, or skilled to work in them. 

The labor shortage in the US has become a classic problem for businesses ever since 1 in 4 workers quit their job last year. Now, most businesses across the US struggle with finding workers to fill open positions. 

The most affected industries are healthcare, transport, hospitality, social assistance, and foodservice industries. The commonality in these industries is that employees need to be available in person during work hours. These industries also have lower wages across the spectrum.

However, other industries that rely on knowledge workers are also experiencing a country-wide labor shortage. 

What is causing the labor shortage in the US?

Many aspects and factors continue to play a part in the ongoing talent shortage. Here are the most common factors driving the shortage:

Better compensation

Simply put, workers want to be paid more money, and in their words, what they are worth. This is especially true in the healthcare, food service, and transport industries. But the need for better compensation has spread to almost all industries. 

The increased cost of living and healthcare is pushing workers to look for higher wages. Unfortunately, most of the open positions do not cater to this need. 

Need for more flexibility

Remote and hybrid working has also contributed to the labor shortage. The past year and first quarter of this year saw a looming tussle between employers and employees.

Employees need and seek out flexibility, but employers are more reluctant to offer this flexibility. A study by Future Forums of 10,000 knowledge workers showed that employees want more flexibility in jobs and location. However, most businesses are still grappling with remote working, making it harder to attract top talent or retain current employees.

A question of purpose

It may seem inconsequential, but the pandemic forced many to rethink their life in general. A common theme that workers are now pursuing is their purpose, passion, and goals. The HR community has popularly rephrased The Great Resignation to The Great Reevaluation to reflect this change.

In one survey by Indeed, 92% of the people who voluntarily left their job in the first quarter of 2020 felt that "life is too short to stay in a job they weren't passionate about." 

Workers are now more intentional in working jobs that give them a sense of purpose. Regrettably, most companies' culture and mission may not inspire this new development. 

Access to daycare

A Bankrate survey found that families need $8,355 per year to afford daycare expenses for one child. This figure is anything but affordable for most families. So, instead of going back to work or looking for new jobs, parents choose to stay home and save on daycare costs. 

How is the labor shortage affecting hiring in companies?

Almost 90% of employers in an SHRM study struggled to fill open positions in the summer of 2021. And now, January saw 11.3 million open job positions and not the right match of people to fill them. 

It doesn't help that the resignation (quit) rate was still high at 2.8% (the equivalent of 4.3 million people) in February

Jobseekers are also complaining of not finding jobs that meet their pay expectations and skills. Case in point; about 48% of job seekers in a FlexJobs survey cited not finding the right positions as their number one frustration when job searching. When the position was right, the pay was too low to accept an offer from the company. 

Conversely, employers have trouble with a shortage of job candidates, even after raising their wages.

This is a call to action for recruitment teams across the globe: with the growing complexity of hiring people, talent acquisition is top of mind at all levels of the organization. Use that momentum to future-proof your strategy and lead by example.
Karim Gharsallah
Global Head of Talent | Recruitee


6 ways to deal with the labor shortage 

With quit rates as high as 4.3 million in February, we expect the labor shortage to continue for longer. This calls for significant action from your end to attract and, most importantly, retain your current workforce. The six strategies listed below can help you achieve that goal.

1. Provide the perks candidates want 

In a 2020 Compt survey, 91% of C-level executives believed their workers were happy with the current perks and benefits. However, 31% of the employees weren't happy with the current offerings.

Traditional benefits of health insurance and 401(k) won't cut it with the labor shortage in full swing. Employers will need to go bigger and find out what perks employees really want. 

Currently, the trending benefits and perks include:

2. Raise the salary 

One of the driving forces behind the high quit rates is compensation. Workers are simply looking for companies that pay them well. Case in point: employers that raised their hourly wages and added more perks and flexibility experienced better employee retention

That said, increasing wages is only one part of the labor shortage equation. Other factors like better working conditions and job flexibility will have to be part of your employee retention plan. 

3. Embrace hybrid work

In an SHRM study, 42% of employees added remote working options to curb high-employee turnover. This is a step in the right direction because remote and hybrid work options are among the top factors employees consider when looking for a job. 

In fact, a Gallup survey found that 91% of employees hoped they would continue with the hybrid work structure. 3 out of 10 workers in the same poll cited they would find new jobs if their employer recalled them to in-office work. 

To retain top talent, consider creating a more flexible hybrid work environment. Employees and job candidates want to spend more time with their families on self-care and pursuing their passions.

Another way you can encourage work-life balance for your employees is by introducing softwares and applications that ease their work pressure.

Hybrid work is one of the few ways they can achieve these goals, so they want to work in a business supporting the same.

4. Change how you measure success 

The traditional methods of performance evaluation are long overdue. If you still measure success by the number of times employees work in-office or by closely watching them as they work, you're sabotaging efforts of employee retention. 

The current labor shortage calls for a reevaluation of how we measure success. 

Now, measuring success should be a mix of securing employee satisfaction and focusing on the impacts and results. Also, putting more effort into how you reward and support workers will go a long way in helping you retain talent. 

5. Elevate your organization culture

Creating a strong company culture means valuing employees, communicating regularly, and mentoring them to reach their individual and team-based goals. By investing in a culture that promotes employees' input, you boost employee engagement. 

Creating this type of culture may take time, but it's sure to create open lines of communication where employees can receive and give feedback freely. Finally, expressing the significance of employee ideas by implementing them will help with retention and boost innovation in the company. 

6. Infuse diversity in your recruitment

In the current war for talent, companies that embrace diversity win. Infusing diversity means removing conscious and subconscious biases in your promotions, compensation, and recruitment. 

In fact, 67% of job seekers cite diversity as an important factor when considering an employer. By being intentional about diversity, you increase your talent pool of skilled candidates. Diversity will also create a culture where employees are brand ambassadors of your workplace because it fosters belonging. 

How will this impact recruitment in the future?

The labor shortage will leave a dent and bring massive changes to how companies do recruitment. Here are some trends and changes we expect to see:

Focus on candidate experience

The experience candidates have with your hiring process significantly influences their decision. To attract talent, recruiters and HR professionals will seek to create a candidate experience marked with transparency, simplicity, and empowerment. Better and more frequent communication will also take center stage during the hiring process. 

Employee referrals 

Employers will double up investing in employee referrals by offering bonuses and continually working on their branding to turn employees into brand ambassadors.  

Reskilling and investing in training

Recruitment is no longer about finding talent. Now, the focus will be on creating talent. Companies will continue to invest in reskilling programs and prepare internal employees for needed roles. Where internal talent is not available within the company, recruiters will create programs to skill candidates for the job. 

Key takeaways

The labor shortage in the US is inevitable. Likewise, there's no telling when it will come to a close. Companies, HR professionals, and recruiters need to embrace these changes and pay attention to what current employees and future candidates want. 

The bottom line? 

Employees want to work in a place where they are well-compensated, have a sense of purpose, and feel valued. So, retaining and attracting top talent calls for intentional strategies to create a better employee experience. 

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