Talent Management By Peter Cappelli/Talent Management Columnist
By Eva Sage-Gavin/HR Leadership Columnist
There is a persistent myth
that the number of new jobs is
growing so fast that it is difficult
for employers to hire. The latest
use of the phrase “skill gap”
suggests there is just no one for
employers to hire.
That is simply not true.
Employers do face a challenge
in hiring, but it is not because of
the number of new jobs.
New jobs still don’t
outnumber those looking for
jobs, but the real story is that
job creation is just a drop in
the hiring bucket, almost a
rounding error. In January
2018, U.S. employers hired 5.6
million people. That is a ton of
recruiting and hiring activity.
How is that possible? Because at
the same time, 5. 4 million people
left their jobs.
Hiring in the U.S., therefore,
is not about filling new jobs.
That’s only about 3. 5 percent
of hiring. It is about backfilling
existing jobs because people
have left. Most of that backfilling
is due to high voluntary
turnover. The remainder
is almost all layoffs, cutting
workers here but adding them
back over there.
Employers aren’t very
interested in hiring people
without jobs, especially new
entrants to the workforce
who have no work experience
and those who are currently
unemployed. When there is a
vacancy, employers try to fill it
by hiring from other employers,
often competitors. That is
why we can have employers
complaining about the difficulty
in hiring at the same time new
entrants and others cannot get
hired. When employers succeed
in hiring someone from another
employer, that creates a vacancy
at that other employer, who in
turn tries to fill it by hiring from
its competitors, and so forth.
A single vacancy can
therefore set off a chain of
hiring and quits, so even a small
number of net new jobs in the
economy can lead to enormous
amounts of hiring and churning.
Yes, I believe employers are
having a hard time filling jobs.
The reason for that is primarily
because they have so many to
fill and, unlike a generation ago
(when hiring was focused on a
small number of entry-level jobs
for which it was relatively simple
to understand the recruiting
issues), hiring now happens up
The Real Crisis in Hiring
chart, spread out across virtually
every job in an organization.
Organizations have so many
jobs to fill because employers
can’t keep their own workers. In
the 1990s, when we had exactly
the same situation, I used to tell
managers to watch the labor
market, and as soon as it started
to tighten, go to the CEO and
say, “Boss, we are going to have
a retention problem.” Within
months, you will look like a
In the 1990s, retention was
top of mind for HR. It’s not now.
We can’t keep our employees
because we stopped trying.
We cut back on promotion
and don’t try very hard to fill
vacancies from within. We
don’t train people for new or
better jobs, and those who
want to advance must leave
for opportunities elsewhere.
In jobs that don’t have real
such as front-line, customer-service jobs and, frankly, even
some manufacturing jobs, we
got rid of practices that retained
people, such as higher pay with
It’s easy to see the costs of
training and of paying more
for experience, and we haven’t
done much to call out the costs
of hiring for our bean-counter
colleagues. Instead, we’re
spending all our time worrying
about how to hire millennials,
even though we don’t actually do
anything about that.
Peter Cappelli is the George W.
Taylor Professor of Management
and director of the Center for
Human Resources at The
Wharton School of the University
of Pennsylvania in Philadelphia.
Send questions or comments to
As HR leaders, we
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Eva Sage-Gavin is a former CHRO with more
than three decades of experience in Fortune 500
corporations. She currently serves as the senior
managing director for Accenture’s global talent
and organization consulting practice and as
a technology board director. Send questions or
comments to email@example.com.