America’s Hidden Workforce

If you talk to employers nowadays, you get one message:  we can’t find workers!  We are clearly in the midst of a major labor market transformation that we’re all trying to understand.  For some time, many claimed that overly generous benefits were keeping people from returning to work.  Yet the evidence supporting these claims seems fairly weak as states that ended increased benefits early did not see a rush of returning workers. Other factors appear to be at work.

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A new Harvard Business School study examines the role of employers in current labor market dynamics.  The study identifies a hidden workforce of as many as 27 million people who may be “falling through the cracks” due to current hiring and recruiting practices.   This hidden workforce includes veterans, people with felony convictions, and others referred to as NEET:  not in education, employment and training. All of these people tend to fall through the cracks in our current hiring systems, which rely heavily on AI and various algorithms to screen potential applicants. These folks may have also missed on relevant training opportunities that would better prepare them for the hiring process.  Because of these gaps in their backgrounds, these potential workers never even make it through the initial screening process.

The report concludes with a series of promising and effective recommendations, many of which focus on how recruiters and human resources departments work.  Addressing these barriers to employment for the hidden workforce will not “fix” our current talent shortage on its own.  We clearly need both talent demand and talent supply solutions if we want to address our current workforce challenges.  This will help employers find the talent they need, and open up new opportunities for the hidden workforce.