AUSTIN, Texas – November 18, 2014 – Indeed, the leading job site and global hiring resource, has released research revealing the economic costs of unfilled jobs – a staggering loss of nearly $160B annually. Of this amount, over half represent unearned wages (around 55%), with the remainder attributed to unearned profits. For the top 10 companies in Dow Jones Index, the combined cost of not filling open jobs for one month equals more than $75M in monthly gross domestic product (GDP).
The inability of an individual business to find and recruit the right hire for a role impacts the economy in two major ways. Failure to effectively resource a business slows both productivity and profits, relying on existing workers to cover skill shortages by working more hours under increased pressure. From a consumer perspective, the inability to earn an income or spend a salary reduces an individual’s contributions to overall economic growth.
The report’s findings illustrate the importance of building and sourcing a strategic recruitment function as the ability to hire the right fit for each role becomes ever more important against a backdrop of lower unemployment and labor participation.
Cost of unfilled jobs is a wake-up call to the U.S. economy
A steadily improving U.S. labor market, characterized by increased hiring, rising business confidence and a decline in unemployment levels from the recessionary peak of 10% in October 2009 is fantastic news for the wider economy. However, for businesses trying to hire in significant numbers, these trends, combined with the lowest labor market participation numbers in decades, represent something of a ‘perfect storm’.
Indeed SVP Paul D’Arcy commented:
“For today’s job seekers, these are near-perfect conditions, however, at almost $160 billion per year, the cost of unfilled roles should serve as a wake-up call to US businesses developing recruitment strategies in a post-recession environment.
“Each ‘empty desk’ represents an opportunity both for the individual and the business. For the business, finding and recruiting the right individual means better productivity and profits, while for the individual, earning an income and spending a salary contributes to wide economic growth. In today’s economic environment of lowered unemployment and labor participation, it has never been more important to hire the right fit for each role.”
Other key findings from the report
- Nearly $160B is the annual potential value of unfilled job opportunities in the U.S.
- While total employment has now almost caught up to its pre-recessionary peak with over 2M jobs being created in the first nine months of 2014, labor market participation has fallen to its lowest level in decades. A large number of unfilled, open roles may well cause problems for the economy in the years ahead.
- Many businesses have to wait for significant periods of time to find the right person for the job, with 33% of openings in the U.S. remaining open for at least 3 months.
- There are a number of industry sectors in which unfilled jobs have greater impact due to the higher levels of contributed economic value, including finance, insurance, and professional services. These industries alone collectively represent over $4B GDP (GDP, a measure of goods and services produced within an economy and the income generated by that economy) in a typical month.
- For states and industries which can achieve reductions in the time it takes businesses to fill job vacancies, there are clearly significant economic gains to be made and greater amounts of economic potential can be unlocked by better matching the right people to the right job opportunities.
- For the wider economy, the efficient matching of potential employees to businesses through the labor market is key to supporting healthy levels of employment and household incomes, while allowing businesses to reach full productivity.
To view the full research report, please click here.
About the data Using Indeed’s job advertisement data, the Centre for Economics and Business Research (Cebr) assessed how long it takes businesses to find suitable candidates. The length of time it takes for a company to fill job vacancies with the right people for the job can be a key determinant of their ability to expand and drive the economy forward. All data are from April 2013 to April 2014 unless otherwise state.
Indeed Contact InfoFaith Yando email@example.com