Why Is Hiring So Hard for Employers Right Now?

July 26, 2016

It’s an extraordinary labor market with entirely ordinary causes.
Something is up in the labor market. Across the country CEOs and HR professionals keep telling the same story: they have a lot of jobs sitting open and can’t find anyone to hire.

It’s not for lack of trying. While down from the heights of the Great Recession hiring managers remain inundated with demand for most of their empty seats, with an average 250 applications per corporate job opening. It’s a paper hurricane that explains the reciprocal frustration and nervousness job seekers say they feel.

But then there’s the data. A confident labor market emerges from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Summary (JOLTS), which puts the quit rate at its highest level since 2008 and unemployment has dropped to 4.9 percent.

Meanwhile, the time it takes to fill those newly-emptied positions has hit record highs. At 22.9 days to fill an average job opening, the per-worker investment has grown dramatically in recent years jumping by more than three days per opening since 2009, according to Glassdoor research.

So what’s happening? These may be unusual circumstances, but the drivers are entirely fundamental. It boils down to money and fit.

Key takeaway: As employers struggle to hire, the reasons for this struggle boil down to wages and mismatched talent.

Workers are getting scarce, especially in the hottest industries.
As Snap Media CEO Christian Brucculeri explained, finding the right people takes time. Finding the wrong ones takes a lot more.

“One bad hire in the wrong role can really change a company for the worse,” he said, “so it’s a high risk endeavor.”

“Buying a house, you can get an engineer to come and look at the foundation; buying a car, you can take it to a mechanic. [But] people have so many soft skills that it’s very different to know what someone can contribute to a company until after they’re in it and working.”

That process is only made harder by the lack of available talent.

According to BLS data the ratio of job seekers to job openings has been sinking for years, most recently hitting 1.4 job seekers to every job opening. With the supply of labor and the number of job openings approaching parity, finding talent can feel like hitting a bullet with a bullet.

Not every industry shares these struggles equally. As many employers have pointed out, it’s simply harder to hire for some skills than others. Whether that’s driven by a specific STEM shortage remains hotly debated, but there’s no question that hiring times and the labor market go hand in hand.

Here, for example, are the three industries where jobs stay open the longest, according to the DHI Hiring Indicators.

  • Government: 35.5 Days
  • Financial Services: 42.8 Days
  • Health Services: 48.3 Days

Compared to the shortest:

  • Resources: 14.2 Days
  • Construction: 14.5 Days
  • Leisure and Hospitality: 19.7 Days

Now compare to the three industries with lowest unemployment:*

  • Education and Health Services: 3.6 Percent
  • Government Workers: 3.6 Percent
  • Financial Activities: 2.2 Percent

*Counting “Manufacturing” as one category, although manufacturing of non-durable goods has an unemployment rate of 3.4 percent.

As Glassdoor’s analysis on interview duration has shown, hiring durations by industry have gotten longer. Government jobs can take upwards of 60 days to interview, while universities and hospitals will spend a month or more placing a single candidate. The retail and franchise sector, on the other hand, will hire with a brisk eight-day process.

The reason is a combination of availability and commitment.

Interviews tend to last the longest in fields where workers stay the longest. Jobs in government and hospitals involve some of the lengthiest tenures. The median federal worker will stay in his or her position for 8.5 years and a hospital worker 5.7. Meanwhile, a university professor stands the chance of someday gaining an appointment for life.

Food service workers will often leave their job in two years, making their hire much less of a risk.

Also driving vacancy duration is the fact that employers have few options to choose from. There just aren’t enough workers, and the positions that take the longest to fill reflect the tightest markets. While nationwide unemployment may actually be nearing too low at 4.9 percent, specific industries like accounting take even longer to fill because most CPAs count among the heavily employed.

Construction workers on the other hand (unemployment rate 11 percent) are distressingly easy to find, and those jobs fill quickly.

Key takeaway: It’s not as simple as skill mismatch. There are fewer available workers overall, and they’re getting vanishingly rare in the industries most desperate to hire.

To speed up hiring, look where the workers are–or train them.
What can an employer do about this? Start by considering geographic flexibility. Firms who have to compete in hot labor markets are going to struggle, but that doesn’t mean there’s no one out there. They just may not share your particular postal code.

Where candidates live can make a huge difference. Remember how profoundly sector-based unemployment impacts staffing? Well so, too, does the local talent pool. For example, take these 10 cities in which unemployment is well below the national average:

  • Austin, Texas: 2.9 Percent
  • Nashville, Tennessee: 3.0 Percent
  • Minneapolis, Minnesota: 3.1 Percent
  • Denver, Colorado: 3.3 Percent
  • San Antonio, Texas: 3.4 Percent
  • San Francisco, California: 3.4 Percent
  • San Jose, California: 3.4 Percent
  • Boston, Massachusetts: 3.5 Percent
  • Dallas, Texas: 3.5 Percent
  • Salt Lake City, Utah: 3.6 Percent
  • Washington, D.C.: 3.6 Percent

Employers in those cities face a shortage of local workers, but you’re not out of luck. Consider instead whether it’s possible to allow telecommuting or to staff a position at another office. Tight regional markets might make hiring tough in San Francisco, but that perfect candidate might be sitting in a Chicago coffee shop (5.4 percent unemployment) waiting for your call.

Also, as some employers have suggested, consider hiring a diamond in the rough.

“Car dealerships face tremendous difficulties when searching for well-educated, qualified talent,” said Max Zanan, President of Total Dealer Compliance. “Therefore it’s crucial that they incorporate professional training and development programs.”

“Rather than approaching hiring from the standpoint that ‘everyone can be easily replaced,’” he suggested, “managers must instead provide a career roadmap to new hires.”

The labor market is brewing almost a perfect storm for employers today. With applicant/opening ratios at a meager 1.4 and unemployment plummeting in coveted skill sets, the odds of finding a highly trained unicorn are getting larger—and so is the time it takes to find her.

So consider searching afield or training someone with fewer turnkey skills instead. The right candidate might not be the one who comes in knowing how to do the job right off the bat. She might be the one with the talent and the drive to learn and eventually teach others.

Key takeaway: Unemployment isn’t a continuum. Workers are more available in some areas and some industries and businesses can speed up their hiring by reaching out to people who might be trainable or willing to relocate.