A talent shortage arises when businesses struggle to find enough qualified professionals to fill specific roles due to a lack of individuals with the right expertise or training. This usually occurs when the need for particular skill sets surpasses the number of people available to meet that demand.
How Talent Shortages Impact Businesses
Some industries are more frequently affected by talent shortages, such as healthcare, education, IT, transportation, communications, and consumer services. As industries evolve, the gap between available talent and employer needs is expected to widen.
A Korn Ferry report estimates that by 2030, over 85 million jobs could remain vacant worldwide because there won’t be enough skilled workers to fill them. This shortfall could cost the global economy an estimated $8.5 trillion annually, with the U.S. alone projected to face a deficit of over six million workers.
For employers, the consequences of not having the right talent in place can include:
- Slower innovation and growth
- Decreased ability to compete
- Increased workloads for current staff
- Higher stress levels and burnout among employees
- Lower morale, leading to more resignations
- Declining profitability
While every industry can be affected, ongoing labor data shows that education, health services, and professional business sectors often have the most unfilled positions.
Why Are Talent Shortages Happening?
Several underlying factors are driving this challenge:
1. The COVID-19 Aftermath
The U.S. labor market has been experiencing growing shortages for more than a decade. The pandemic only worsened the issue. The so-called “Great Resignation,” which began in 2021, led millions to quit their jobs, and although resignation rates have declined since then, hiring still lags behind.
2. Widening Skills Gap
A skills gap refers to the mismatch between the skills employees currently have and those needed for available roles. In a 2024 Springboard for Business survey, 70% of leaders admitted their organizations are facing a skills gap that negatively impacts performance.
Highlights from the survey:
- Data analysis and project management were among the most in-demand technical skills
- Cognitive skills topped the list of needed soft skills
- 40% of executives said skills gaps are growing
- The biggest hiring obstacle is the lack of qualified candidates
3. Other Contributing Factors
- Rapid technological changes demanding more digitally skilled workers
- A surge in demand for remote or flexible jobs, requiring different skills
- Expanding industries outpacing the supply of talent
- Regional talent mismatches, with oversupply in some areas and shortages in others
- Aging workforce and lack of younger workers with sufficient experience
- Global mobility leading skilled workers to seek opportunities in higher-paying markets
How Employers Can Respond
To overcome talent shortages, organizations need to take proactive steps:
- Upskilling existing staff: A top strategy, according to Springboard, with 63% of leaders prioritizing it for 2025.
- Reskilling: Train employees to take on different roles within the company.
- Modernizing hiring practices: Move beyond traditional recruiting – embrace skills-based hiring, flexible job models, and work with staffing agencies to widen the talent pool.
- Diversity and inclusion: Encourage a broader range of ideas and perspectives by building a diverse workforce.
- Partner with schools and workforce programs: Help shape curricula so graduates are ready to contribute from day one.
- Offer strong compensation and benefits: Attracting top-tier talent often comes down to offering competitive packages.
Finally, to foster long-term growth, leaders should invest in continuous learning and development, not just for their teams, but also for themselves. Embracing a culture of learning will help companies remain agile and better equipped to fill roles as industries change.
For companies needing help navigating workforce development and payroll operations, Beyond provides modern tools and expert support to stay ahead in a competitive hiring landscape.