Although the persistently tight labor market is beginning to show signs of slackening, companies are still struggling to find enough workers to fill their open positions. In the United States, there are significantly more job openings than unemployed people who are actively looking to fill them. However, the keywords there are “actively searching,” as many potential employees don’t fall under that category. The U.S. Department of Labor only counts people as unemployed if they’ve actively looked for a job within the past four weeks – assuming the DOL can find them to ask that question in the first place.
This represents a major opportunity for proactive hiring professionals who are looking to gain an edge amid fierce competition for talent. There are millions of overlooked Americans who aren’t included in the official unemployment rate of 3.5 percent because they aren’t currently searching for a job or they fall outside the DOL’s time window. But this doesn’t mean these people are unreachable – if companies expand their efforts to identify and recruit candidates, they’ll discover future employees who aren’t showing up in government statistics. This won’t just connect companies with the talent they desperately need – it will also help to draw workers out of the shadows.
There’s a lot of talk about the strong labor market today, but these conversations need to consider the entire economic picture instead of the deceptively low unemployment rate. When HR teams focus on the millions of available workers who aren’t technically classified as unemployed, they’ll alleviate their talent shortages while contributing to a healthier labor force more broadly.
Real Unemployment is Higher Than You Think
At the beginning of the COVID-19 pandemic, the labor force participation rate collapsed as the unemployment rate surged. But as the latter returned to pre-pandemic levels, the former has remained depressed – from 63.3 percent in February 2020 to 62.3 percent in December 2022. This rate is critical because it captures a reality that the unemployment rate misses. As the U.S. Bureau of Labor Statistics explains: “All persons who are without jobs and are actively seeking and available to work are included among the unemployed.” This leaves many people out.
While early retirements, a legal immigration slowdown, and other factors have contributed to the shrinking labor market, a February 2022 working paper published by the Federal Reserve Bank of Chicago found that a lower willingness to work was also having an impact. This should come as no surprise – the quit rate remains high as employees continue to demand more flexibility on the job, better benefits and compensation, and greater opportunities for professional development and talent mobility. Meanwhile, we’re in the middle of an employee engagement crisis – Gallup reports that just 21 percent of employees say they’re engaged at work, which can lead to turnover, cultural problems, and lower productivity.
Even when employees stick around, their lack of engagement and frustration with the status quo can lead to quiet quitting (a term I loathe, but that’s an article for another day), which refers to workers becoming less invested in their jobs and doing the absolute minimum necessary to remain employed. Is it any wonder that many of the workers who’ve dropped out of the labor force are feeling similarly disenchanted about their prospects? Just as many employees are merely going through the motions at their jobs, many would-be employees don’t see a compelling reason to rush back to work in the first place.
How Companies Can Reach Overlooked Workers
While the labor force participation rate has remained stubbornly low over the past two years, this doesn’t mean companies should write off millions of potential employees who aren’t lining up to go back to work. In many cases, these apprehensive former workers are experienced professionals who would make a great addition to your team. They’re just deterred by the frustrating process of reentering the workforce, anxious about shifting workplace demands and environments, or in the process of reassessing their professional lives.
But before hiring managers and HR teams even think about how to convince these professionals to return, they have to be capable of finding and contacting people who are no longer classified as “actively seeking” work. This is where talent rediscovery can be a powerful tool. Hiring managers are increasingly scanning their records to resurface potential employees who have previously applied for positions at their companies, as these candidates are more likely to suit their needs, and they’ve already expressed interest in a position. There are also great tools that seek to operationalize this process like Retrain. These candidates’ former applications will provide invaluable information for personalized outreach, and this level of engagement may be enough to bring them back into the labor force.
There are many other strategies hiring managers can explore to identify overlooked workers. They can forge relationships with educational institutions, community groups, and other organizations where former workers may be active. They can reach out to part-time gig workers who were full-time employees before the pandemic. At a time when there are still many more jobs than workers, hiring managers will have to get creative about expanding their networks and finding talent where their competitors forgot to look.
Meeting Potential Employees Where They Are
As the quit rate soared over the past several years, the “Great Resignation” quickly became part of the lexicon for many HR professionals. But some in the industry prefer alternative terms like the “Great Reevaluation” to capture the fact that the social and economic turmoil caused by COVID-19 convinced many employees to take a hard look at what they want out of their careers. Employees are increasingly demanding remote work options, more robust financial support, a wider range of benefits such as mental health coverage, professional development opportunities, and greater flexibility.
HR teams are attempting to meet these emerging demands and expectations, which will lead to long-overdue changes in their relationships with employees. These changes may also appeal to former employees who dropped out of the labor force, and the companies that want to attract these potential workers should make it clear that they take employees’ shifting concerns and priorities seriously. At a time when household debt is surging – including a 15 percent year-over-year increase in credit card balances, which is a two-decade high – and the personal savings rate has collapsed, many workers who’ve been on the sidelines since the beginning of the pandemic may start exploring their options to return to the workforce. Your company should get a head start by finding these future employees now.
Although the unemployment rate is hovering around 3.5 percent, it’s clear that this figure is undercounting how many Americans are out of work. Instead of writing these workers off, hiring managers should be doing everything possible to bring them back into the fold.
Matt Ekstrom Is Director of Sales and Partnerships for RecruitingDaily. Matt is a long-time veteran of the HR and TA tech space. A former co-founder of several companies including HiringSolved, he's an in-house expert for effective branding and growth strategies in the industry. Wanna talk shop? Drop him a note. Matt's always game to talk about the recruiting and HR tech space or creative marketing campaigns.
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