In brief
- Despite global talent shortages, a large part of the workforce – including groups like caregivers, people with disabilities, refugees, veterans and the previously incarcerated – is willing and able to work but remains unemployed or underemployed. This is referred to as the hidden workforce.
- Biases, stereotypes, and prejudices that permeate organizational decisions play a big role in keeping this hidden workforce untapped. Other factors include a lack of flexibility for individuals with specific needs and outdated employment practices and policies that inadvertently exclude certain talent pools.
- Understanding and addressing the unique challenges and barriers each group of hidden workers faces enables organizations to access this underutilized talent and address looming skill shortages.
By 2030, 2.1 million jobs will remain unfilled in the United States alone. In the last two years, we have seen an exodus of the workforce (such as the Great Resignation) and persistently low unemployment rates across the globe. The impact on economic growth will be significant as there will simply not be enough skilled workers to sustain the economy.
However, it is not all doom and gloom. Amidst this reality, there are workers who are willing and capable of contributing, yet due to various factors, they are unable to participate in the workforce. Estimates say that the size of this so-called hidden or forgotten talent pool is 27 million people in the United States – equating to roughly 17% of the total workforce.
In this article, we explore the hidden workforce and why this remains an underutilized talent pool. We deep dive into five viable hidden worker talent pools and explain why these exist. We’ll look into typical barriers to entry and present practical approaches organizations can utilize to gain access to this talent.
What are hidden workers, and why are they not part of the workforce?
Hidden workers refer to employees who are either underemployed or unemployed, although willing and able to contribute to the workforce. This includes caregivers, disabled workers, those suffering from long-term illnesses, veterans, refugees, and previously incarcerated individuals. These workers face significant barriers to entry into organizations, as their needs and ability to contribute differ from other, more traditional talent.
The term ”hidden workforce” was first used by Harvard in their research report “Hidden Workers: Untapped Talent”. The report aimed to shed light on how organizations are impeding their ability to identify and access various talent pools. The report highlighted categories of hidden workers and the ways in which these workers are overlooked and excluded from the workforce.
Fast-forward to the present, the hidden workforce is increasing in number, and organizations are still struggling to successfully access this hidden talent. Tapping into the hidden workforce is one of the key HR trends of 2024.
The barriers that keep the hidden workforce untapped
Although these workers are not a homogenous group, they face similar barriers that inhibit their entry into the labor market.
Hidden workers remain underemployed or unemployed due to a number of factors like perceptions, lack of effort and awareness, as well as exclusionary organizational practices. Let’s take a closer look.
Biases, stereotypes, and prejudice
Often, the biases, stereotypes, and preconceived ideas about certain groups of people reflect in the decisions, opportunities, and subjective evaluations of value at the organizational level. These notions typically impact underrepresented, marginalized, or disadvantaged groups, such as ethnic and other minorities.
This is the subtle exclusion of groups who do not meet the “minimum requirement” to participate in the workforce due to lack of opportunities, financial barriers, previous criminal convictions, or health-related challenges. If organizations don’t actively manage these biases, it could easily lead to discriminatory practices, whether intentionally or unintentionally.
We often see these biases reflected in talent selection and identification decisions. In some cases, these decisions are either not based on objective data or lack contextual interpretation of the data. The unintended exclusion of certain groups through automated hiring practices is another example of this in practice.
Example from practice:
Raul is a 19-year-old job seeker. Due to family circumstances, he was unable to finish high school and does not have a high school diploma. He sets out to find an entry-level role at a local retailer. Unfortunately, one of the minimum requirements for this role is a high school diploma or equivalent. Without a job, he is unable to enroll for a relevant qualification and, as such, remains unemployed and out of the workforce.
Lack of flexibility or accommodation of specific employee needs
A large portion of the workforce live with long-term health conditions that make regular work conditions challenging to manage. This could include physical health challenges, such as chronic or longer-term illness and disabilities, as well as mental health challenges, such as depression or anxiety disorders.
For these workers, flexibility in work conditions and physical workspaces can alleviate some of these challenges while still providing opportunities for meaningful work and employment. However, without acknowledging these challenges or accommodating the needs of employees, organizations exclude and create barriers that make it untenable for these employees to work.
Example from practice:
Ashwin’s sight is heavily impaired. He requires a reader and a special keyboard when working on a computer. He has been working at a local call center for the last five years, which does not require much use of a computer. However, he feels that he can contribute more as he also has bookkeeping skills. He has been rejected from all of the jobs he has applied for, as they are unable to accommodate his physical impairment.
In some circumstances, employees also have childcare or caregiver responsibilities, such as looking after an elderly or sick family member. These employees require flexibility or specific benefit requirements that align with caregiving responsibilities.
It could also include the need for additional work hours or shifts to create additional income. Without this support, these employees often leave the workforce as a last resort to managing this tension.
Example from practice:
Amy is a single mother of a 4-year-old. She is a management consultant at a busy firm and works 8 to 9 hours a day. Her daughter has just started preschool, and Amy requires some flexibility and reduced hours to tend to this responsibility. Her current employer is unable to accommodate this, and she has to resign to find an alternative.
Employment practices and policies
Unfortunately, there is a tendency for organizational practices to consistently exclude hidden workers from workforce opportunities. This is either through a lack of awareness and access to these workers or as a result of outdated practices and policies.
It does not necessarily reflect an unwillingness to include these talent pools. Rather, it points to a lack of awareness of where and how to find and access this talent.
There are also practices and policies that organizations put in place that intentionally or unintentionally exclude hidden workers. The most common display of this is in automated screening and out-selection criteria, which do not consider the minimum requirements of the job. Often, the technology solutions that are intended to lift the operational burden of selection are affected by bias and are inaccessible to many workers.
Organizational policies can also constrain the employment of certain workers, such as refugees, retired workers, and contractors, through rigidity and unnecessary bureaucracy, leading to the exclusion of these workers.
Example from practice:
Anisha is a professor at a local university. She is 60 years old and has reached what her university has set as the retirement age. She is still actively involved in research and supervising students; however, she has to retire as mandated by the university’s policy.
To overcome these barriers to entry, talent management practices have to evolve. Like other talent pools, the hidden workforce needs to be looked at as a talent segment. This implies understanding the composition of the talent pool, how it can add value, and how to redesign talent management practices to access this talent pool.
Accessing the hidden workforce: Five talent pools to prioritize
The hidden workforce represents a number of different types of workers – each with unique characteristics, barriers, and benefits. We have identified five talent pools that we believe organizations can access as a priority to complement current talent initiatives:
1. The non-permanent worker
These workers include gig workers, contractors, and other contingent workers. They are considered a part of the hidden workforce (sometimes called semi-hidden) due to their underemployment and less visible status in the organization, often resulting in exclusion.
They are not entitled to the same benefits as permanent employees and are not recognized for their contributions.
Similarly, businesses don’t prioritize their development, and instead of broadening their expertise, they are “exchanged” by others who already have the skills. For individuals, this results in disengagement with work and exclusion and negatively impacts employability. For organizations, this means a constant loop of “find and replace,” which is not cost-effective or sustainable.
Strategies to access this talent pool
Firstly, critically consider the skills needed to perform work. If these are scarce skills or core to the business operation, organizations need to consider permanent resourcing. Seagate Technologies unlocked almost 35,000 hours within 45 days of launching their internal Career Discovery Platform.
The platform allows employees to participate in and contribute to projects in addition to their regular (part-time) working hours and roles. This means that instead of sourcing new skills, the company can redeploy and re-utilize internal skills and tap into the previously hidden workforce.
If there is a need for temporary resources, consider increasing the number of hours that these workers work and include them in other organizational activities and programs usually reserved for permanent employees. This creates a deeper connection to the organization and presents an opportunity for closing the growing skills gap. In turn, this leads to higher levels of productivity and contribution from these workers, who are eager to be part of the workforce.
JP Morgan Chase is a leading bank that provides comparable benefits for their non-permanent workers. This includes retirement benefits and health and disability benefits. The company acknowledges that these workers still have the same needs as regular employees despite their non-permanent status.
2. The retired worker
The share of people over 65 will increase from 10% in 2022 to 16% in 2050. Yet, the retirement age globally only changes slowly, even though the workforce post-retirement are able and willing to work longer.
Unfortunately, due to ageism, retiring workers are often seen as “dead wood” or blocking opportunities that should be allocated to younger workers. Yet, this talent pool offers a wealth of knowledge and experience that they have accumulated over time, which businesses can still employ in a meaningful manner.
Organizations often undervalue this, as the focus is usually on bringing new skills into the workforce.
Strategies to access this talent pool
Through part-time or flexible work arrangements specifically targeted at retired workers, as well as extended employment arrangements, retired workers can meaningfully contribute and transfer knowledge. Retired workers outside of the organization can also be a useful network and talent pool to tap into for specific projects or assignments.
Aviva is a UK-based insurer who actively supports the “over 50” workforce. Their research revealed that age diversity has the potential to unlock as much as 45% growth in market share for organizations that draw on the talent and experience of all workers, regardless of their age.
In their own organization, Aviva actively promotes age diversity by understanding the needs of their over-50 workforce and aligning their people practices to support and engage these workers. They found that 1 in 6 older workers leave the workforce due to caring responsibilities. As such, they have partnered with external partners and the government to ensure they can provide flexibility for these workers and keep them within the workforce for as long as possible.
Aviva’s approach that supports and encourages age diversity and inclusion not only creates meaningful opportunities for contribution from older workers but also enhances productivity and organizational capability in the longer term. Recognizing the value of this experienced talent pool can be a strategic advantage for employers looking to address skill shortages and promote diversity in their workforce.
3. Refugees and asylum seekers
As migration, wars, and extreme weather conditions displace more and more people, this group of workers has emerged as a talent pool who are excluded and underutilized.
The perceived burden of employing refugees and asylum seekers frequently outweighs the benefits that these workers are deemed to offer. They also face inherent biases because of their legal status, language skills, and cultural differences. This means that workers with critical and scarce skills are simply excluded from organizations as a result of their refugee status.
In some cases, these workers face exploitation and underemployment, never contributing to their full potential. Typically, they also do not have visibility of the opportunities available to them or do not match the exact requirements of opportunities as these are often different from their home country. As such, they remain unemployed.
Strategies to access this talent pool
Aligning talent acquisition as well as development efforts to the unique needs of this talent pool should be a priority.
Ikea recognizes that hiring refugees is a smart business decision. Not only does it contribute to achieving the UN Sustainable Goals, but it also leads to higher productivity and reduced turnover. In the US and Australia, turnover rates are 73% lower for refugee employees. What’s more, hiring diverse employees increases innovation, morale, and engagement while driving social responsibility.
The furniture retail giant has made this commitment visible through their dedicated skills program in partnership with government councils. They provide employability and language skills workshops and placements to gain exposure and build an employment record, with the aim of absorbing them into the workforce.
To successfully hire refugees, organizations require flexibility or contextual evaluation of qualifications and skills to avoid unfair discrimination during selection. They can recognize this group’s transferable skills and reskill them to fully integrate into the business. This may require dedicated upskilling programs and an investment in this talent pool. It also means extending support beyond just employment (counseling, legal support, financial advice, and housing) to set these workers up for success.
4. Neurodivergent and differently-abled workers
Neurodivergent workers are individuals who have non-typical social preferences and ways of learning, communicating, and perceiving the environment. These include individuals with conditions such as ADHD, autism, and other neurobehavioral challenges. Differently-abled workers represent individuals with physical impairments or disabilities, which could impede their physical and mental abilities to a greater or a lesser extent.
Historically, these workers have been excluded from the workforce where stigma exists around these conditions, or organizations have simply been unwilling to make the necessary accommodations for these workers. There is also a lack of understanding and misconceptions about these workers, resulting in inaction.
Strategies to access this talent pool
This talent pool often faces barriers to entry into the workforce. This includes hiring practices that are not aligned with the needs of these workers. For example, traditional interviewing practices create anxiety for some neurodivergent candidates. In these situations, their interview performance may not match the desired performance level, resulting in their de-selection.
Dell is considered a progressive employer in seeking out and employing neurodivergent workers. They have adjusted and aligned their hiring practices to accurately assess the potential of these individuals. This reflects flexibility and inclusivity, ensuring that neurodivergent workers receive an equal opportunity to gain access to employment. Through this approach, they have employed some of the best minds and talent in the industry.
Ensuring that hiring practices are not exclusionary also means sensitizing and educating hiring decision-makers to reduce bias and stigma.
Brownies and Downies was born out of a need to see more neurodivergent representation in the hospitality business. They employ people with intellectual disabilities in their coffee shops, which has expanded across Europe. This challenges the conventional idea that people with disabilities can work in sheltered employment environments. Instead, they can be contributing members of society and the economy. A commitment to diversity has to be reflected in the workspaces and work arrangements available to these individuals.
The Restaurant of Mistaken Orders in Tokyo is another great example of a business exclusively employing individuals suffering from dementia to provide them with gainful employment.
5. Reentry workers
Reentry workers represent individuals who rejoin the workforce after an extended period of absence. These workers include formerly incarcerated individuals, parents, employees returning from career breaks, and long-term unemployed workers.
They have skills that can be developed or deployed in organizations but are undervalued and excluded. In the case of reentry workers, many barriers relate to the effort associated with reintegration into the workforce.
Parents who have taken a leave of absence due to caregiving responsibilities often return to the workforce in entry-level positions to “get their foot in the door again”.
In turbulent economic conditions, many workers are affected by layoffs, often resulting in long periods of unemployment despite efforts to gain employment. In these cases, hiring practices deem career breaks as de-selection criteria and, therefore, exclude these individuals from the process.
Existing skills and transferable skills are ignored, and we see previously skilled workers underutilized across various industries and roles.
Strategies to access this talent pool
Goldman Sachs has launched a “Returnship” program specifically designed for individuals rejoining the workforce after an extended period of absence. They value the experience and diversity of returning workers and employee individuals despite resume gaps. They offer a six-month paid program across various business divisions to upskill and reintegrate these workers.
Timpson is a UK service retailer that specifically employs formerly incarcerated individuals. About 12% of their workforce either has a criminal record or has been directly recruited from custody. While there are some complexities that the business has to manage, they recognize the potential of this workforce, as well as their responsibility as an employer to make a positive contribution and impact.
Based on their success, many other employers in the UK are following their example – systematically breaking down stigma and barriers for these workers.
A final word
Skill shortages continue to be a business challenge for HR professionals to solve. Our conventional ways of looking at talent pools and our traditional talent management approaches are no longer sufficient. The hidden workforce has the potential to change the talent landscape if we are willing to move beyond current practice, bias, and barriers.
Awareness of these barriers is the first step towards change, but organizations need to take tangible action to shift towards a different future. For HR, this presents a significant opportunity to transform our practices and drive true diversity and social impact.
