Though we aren’t in the talent crisis experienced post-COVID and the Great Resignation, talent scarcity still persists. As of November 2024, according to the U.S. Chamber of Commerce, there were 7.7 million open jobs in the U.S., but only 7.1 million unemployed workers.
And a data report from Lightcast predicts this problem getting worse, projecting that U.S. population growth will outpace labor force growth eight to one by 2032. The hospitality, health care, and service industries are expected to be hit the hardest.
To succeed in the current talent shortage and prepare for talent gaps to come, employers must adopt proactive strategies to attract, retain, and develop talent.
Understanding Talent Shortage
The U.S. Chamber calculates a Worker Shortage Index number to show the number of available workers for every job opening. As of November 2024, that number was 92 workers for every 100 jobs. Chamber analysis of U.S. Bureau of Labor Statistics data reports the following industries being affected:
- Financial activities
- Professional and business services
- Leisure and hospitality
Industries that can’t offer remote work struggle worse. For example, data shows the leisure and hospitality industry has experienced the highest quit rates of all industries, with the accommodation and food services subsector experiencing a quit rate consistently around 4% since July 2022.
Causes of Talent Shortage
The worker shortage we’re currently in stems back to the pandemic, when more than 120,000 businesses temporarily closed, leaving more than 30 million U.S. workers unemployed. Many of those people never returned to work, whether for early retirement, prioritizing personal growth, or changing their lifestyle.
Other factors contribute to the labor shortage, including:
- Demographic changes and aging workforce: An aging population and lower birth rates have led to fewer workers entering the labor market. As experienced employees retire, organizations face challenges in filling positions with younger talent.
- Skills gap and education system shortcomings: Many education systems are not fully aligned with current industry demands, resulting in a workforce lacking the skill set needed for emerging roles. This gap particularly affects industries requiring specialized technical skills.
- Economic factors and market dynamics: Salary expectations, geographic mobility, and changing worker preferences regarding work-life balance all influence the availability of talent. Economic uncertainty can also impact both hiring decisions and workers’ willingness to change jobs or invest in new skills.
- Impact of technology and automation: While there’s not necessarily a lack of talent, many workers require reskilling to meet the demands of increasingly automated and tech-driven workplaces.
Top Strategies to Overcome Talent Shortage
The top strategies to overcome a talent shortage and find skilled workers include the following:
Invest in Employee Training and Development
One of the most effective ways to address a talent shortage is to invest in upskilling and reskilling your current workforce. By equipping employees with new or advanced skills, organizations can bridge the gap between existing talent and the demands of evolving roles.
Examples of effective training programs include technical certifications, leadership development workshops, and online learning platforms tailored to industry-specific needs. These initiatives not only enhance employee capabilities, but also boost morale and retention. Gallagher’s 2024 U.S. Career Wellbeing Report finds career development is a top lever employers use to increase engagement and retention.
Enhance Recruitment Processes
In a tight labor market, an agile recruitment process proves critical. Leverage technology, such as AI-driven tools and applicant tracking systems, to streamline the hiring process and identify the most suitable candidates more efficiently. To ensure fairness and effectiveness, organizations should complement these tools with skill-based assessments and structured interviews, creating an objective evaluation framework that minimizes hiring bias.
Looking beyond immediate hiring needs, organizations should focus on building sustainable talent pipelines through strategic partnerships with universities, professional associations, and industry networks.
Promote Workforce Diversity and Inclusion
In addition to being the right thing to do, creating an inclusive workplace helps address talent shortages by tapping into previously overlooked job seekers and creating environments in which different perspectives drive innovation.
Review hiring practices to remove barriers that might discourage diverse candidates. This may include revising job descriptions or diversifying interview panels. But don’t stop there. Develop comprehensive diversity, equity, and inclusion (DEI) strategies that go beyond recruitment to shape workplace culture. Key initiatives should include establishing employee resource groups, implementing unconscious bias training, and ensuring equitable advancement opportunities.
Adopt Flexible Work Arrangements
According to The Society for Human Resource Management (SHRM)’s 2024 annual employee benefits survey, 70% of respondents rank flexibility as a benefit they find very or extremely important. Workplace flexibility has become a key differentiator in recruiting and retaining skilled professionals.
While going fully remote isn’t a feasible option for all companies, there are many ways to offer flexibility, including offering flexible start and end times, compressed workweeks, or a hybrid schedule.
Case Studies and Success Stories
Many companies offer skill and credential programs, from courses or certifications to hands-on learning opportunities. For example, Synchrony Financial, GE Appliances, and Unilever have award-winning internship programs. These prestigious programs not only offer interns a chance to truly make an impact, but create a talent pipeline for their sponsoring companies.
Microsoft has a skills initiative that teaches various in-demand skills, like cybersecurity and generative AI. The program includes free learning resources, certification paths, and partnerships with community colleges. It promotes goodwill and builds a talent pipeline.
By aligning business goals with workforce development, organizations can secure a steady stream of qualified candidates and maintain a competitive edge.
How Paycor Helps
Paycor offers several features to help companies prepare for or weather a talent shortage. They include:
- Paycor Smart Sourcing automatically posts your jobs on thousands of job sites to reach active candidates and taps into the world’s largest database of passive candidates.
- Paycor’s DEI tools help employers assess their current diversity levels, set measurable goals, and track progress to build a truly inclusive workplace.
- Modern performance management system that keeps employees engaged and unlocks continuous growth opportunities.
- Onboarding software that makes onboarding more engaging and meaningful for new hires while streamlining processes and minimizing risk for HR teams.
Learn how to build a great place to work where employees show up, make a difference, and win together. View a product demo today.