If you are looking for a job, then you should have no problem finding one. According to data from Indeed, there are about 11.2 million job openings in the U.S. This is actually more than the number of unemployed, which is at roughly 7.4 million.
For employers, the job shortage poses major problems. With the holiday season, companies are looking to ramp up their employment to meet the rising demand. For example, Walmart and Amazon are planning on hiring 150,000 employees.
To deal with this, employers are hiking wages and benefits as well as offering more flexibility with the work arrangements, such as with providing options for remote work.
However, even these strategies may not be enough. As a result, employers are investing more in automation technologies like artificial intelligence (AI). They can streamline processes, improve outcomes, and allow for lower costs. But of course, there are inherent risks as well, including issues of privacy.
So, let’s take a look.
Why the Job Shortage?
A key reason for the job shortage is that employees are quitting their jobs. The phenomenon is often referred to as the “great resignation.” In September of 2021, the quit rate hit 3%. While this may sound small, it is actually an all-time record. About 4.4 million people decided to leave their jobs.
What would lead to such a high quit rate? There are many factors. If anything, the high quit rate means that many employees actually have confidence. They believe it will not be tough to find another job.
But there are other drivers, including high costs of childcare, which was exacerbated by the COVID-19 pandemic; changing of attitudes toward the work-life balance; and rethinking career options or even retiring early.
“The pandemic has really opened up peoples’ eyes to what matters in life and what they want out of a job,” said Hari Kolam, CEO of Findem. “They’re looking for more than a paycheck.
“They want to cut back on their work hours, to avoid hour-long commutes, and to spend more time at home with their families.”
What Does the Job Shortage Mean?
The impact of the job shortage is certainly far reaching. There are already signs that it is contributing to problems with the global supply chain. Then again, there remains a severe shortage of truck drivers.
The result is that inflation is rising quickly, reaching 6.2% in October. This was the highest level since the 1980s. The University of Michigan Consumer Sentiment Index points out that about a quarter of consumers have reduced their living standards.
In a recent Senate hearing, Federal Reserve Chairman Jerome Powel indicated he was considering reigning in the money supply. While this should temper inflation, it could also slow the economy. This uncertainty was reflected in the Dow Jones Industrials and S&P 500, which both dipped after Powel’s comments.
How AI Can Help
In response to the COVID-19 pandemic, companies have scrambled to invest in AI technologies to better manage the hiring process. This has spanned the sourcing, screening, and onboarding of job candidates.
As should be no surprise, tech companies have been at the leading edge. Since they are often data-driven, it has been much easier to adopt AI. The result is that companies like Uber, DoorDash, and Lyft have been able to hire candidates within hours.
But non-tech companies are also getting more aggressive. Just look at Southwest Airlines. It generally takes the company 35 to 45 days to make a job offer. This is simply too long. In fact, by the time the offer is made, the candidate may have already accepted a position with another company.
This is why Southwest has rolled out AI software like chatbots to reduce the time to get to an offer. The company also uses technology that optimizes the language in their job postings to improve the matches and conversions.
Training is another important factor. It’s not uncommon for there to be churn because of deficits in skills. This is why there should be educational programs that are personalized—which AI can be a big help with. There are myriad systems which use sophisticated diagnostics and role-based approaches that can help in the onboarding process.
Finally, AI technology may lead to significant improvements in productivity, which may mean less of a need to hire new people. Consider the customer service industry, which has about 1.7 million open jobs on LinkedIn.
“AI is having a significant impact on customer service because anywhere between 40-80% of customer queries are repetitive,” said Puneet Mehta, founder and CEO of Netomi. “With AI-powered virtual assistants, companies can automatically resolve these and let human agents solely focus on more complex queries.
“This decreases resolution time and increases team elasticity while allowing companies to scale support operations up and down as ticket volume fluctuates.”
While all this is great, AI should not be an automatic response either. Sometimes simple technologies may be the best. For example, one of the most time-consuming parts of hiring is scheduling an interview. To deal with this, you can use a self-calendaring app.
Also read: How AI and Risk Management Can Work Together
The Issues with AI
The HR department has traditionally seen underinvestment in IT. Instead, the focus has often been on areas like finance, marketing, and sales.
But with the job shortages, HR is certainly getting more attention; however, there are some issues, such as with privacy. Will the AI be unfair or discriminatory? Do employees want their personal information to be part of an algorithm?
Interestingly enough, Amazon became a source of controversy because of this. In 2018, the company terminated its development of software that used AI to screen résumés. For the most part, it selected mostly males even though the software did not use gender as a variable. All in all, it showed the problems when using résumés as a data source since they often have gender-specific language or experiences.
The Future of AI and HR
Even with the issues, AI is likely to be more and more important with hiring. Companies will have no choice but to look for ways to automate their process. But there will need to be guardrails, such as using responsible AI and explainability.
“AI can hire at a scale that’s just impossible for humans, even a large team of humans, to replicate,” said Kolam. “Humans can’t help but get tired, whereas machines don’t.
“Most recruiters can only reach out to a maximum of 40 candidates in a given day, whereas there’s feasibly no limit with AI. There’s just no match for the speed and efficiency that AI brings to that part of the hiring process.”