Employers Must Redesign Hiring and Retention for a Permanently Tight Labor Market

Jerry Rubin argues that employers are too often fixated on the labor market’s “short-term weather”—whether hiring is up, layoffs are coming, or a recession may loosen the supply of applicants. The more consequential question, he says, is the long-term climate: the supply of workers is constricting, and the pressure to find and retain staff is likely to intensify.

Steve Dawson develops that supply-side argument through three forces. First, growth in the U.S.-born population has been slowing. Second, labor-force participation has declined: the share of adults ages 16 to 65 who are available and willing to work was about 68% around 2000, he says, and is now roughly 61.5%. The departure of the baby-boom generation from the workforce is a major factor. Third, immigration had been offsetting some of those pressures, particularly after the pandemic. But Dawson says the rapid reversal in immigration policy has reduced the availability of foreign-born workers; he cites a net loss of roughly 700,000 foreign-born workers in the preceding 12 months.

The argument is not that every person who wants work can readily find it. Dawson notes that communities of color, women, people with disabilities, younger workers, and older workers can experience unemployment at rates well above the 4.2% national figure he cites. But that gap is central to the case: employers facing a thinner labor market should not wait for an idealized candidate pool to appear. They need to build relationships with communities that have historically been screened out, overlooked, or inadequately supported.

Rather than waiting for perfect candidates, a recession that produces a flood of applicants, or technology that eliminates the need for new hires, organizations can deliberately build an employee-focused culture—one that recruits differently, redesigns work, and treats retention as a strategic problem.

Artificial intelligence does not, in Rubin’s view, undo the demographic case. Forecasts range from widespread job elimination to net job growth; his and Dawson’s judgment is that AI’s aggregate employment effect may be “largely neutral,” even while particular occupations and industries are substantially reshaped. Employers should therefore treat AI as a tool that can help employees become more productive and spend more time on more interesting tasks—not as a reason to abandon a staffing and job-quality strategy.

The first practical shift is to reconsider not only whom employers hire, but how they hire. Jerry Rubin argues that applicant tracking systems—originally built to handle the surge of online applications—have become a frequent barrier to qualified candidates. Rather than identifying potential, these systems too often screen applicants out.

Rubin cites an estimate from the Society for Human Resource Management that more than half of qualified applicants may fail to get through online applicant-tracking algorithms. The people most vulnerable to that filtering are often those whose work histories do not conform to a conventional template: caregivers whose employment has been interrupted, young people without lengthy and continuous work experience, non-native English speakers who may struggle to navigate the system, or applicants who simply do not know how to optimize an application for the algorithm.

The result can be a process that selects for people who can “game” a hiring system rather than people with the capacity to do the work. Employers can alter their screening systems and algorithms, Rubin says, but they also need hiring channels that do not depend entirely on them.

“Untapped talent” refers to people who would like to work, work more hours, or move into work that better uses their abilities. Rubin says this population—people who are underemployed or otherwise disconnected from suitable work—is estimated to be more than five times larger than the pool conventionally counted as unemployed. The category includes people of color, non-native English speakers, caregivers, young people, older workers, people with disabilities, and formerly incarcerated people.

Those groups are not interchangeable, and recruitment cannot be generic. Reaching English-language learners, for example, may require partnerships with organizations that have deep roots in particular communities. In those settings, personal relationships are often how people connect to work. Recruiting people with disabilities may require adjustments and accommodations, but Rubin describes that community as a particularly rich source of talent.

Caregivers illustrate the operational nature of the problem. Rubin points to employer-supported child care as one route for making work more accessible. He describes a downtown child-care center where parents, including his own family, could drop children off before work; Massachusetts, the state’s largest employer, established a similar center. Such arrangements do not resolve every care constraint. They show employers examining a barrier to employment that sits outside the formal job description and using an available organizational resource to address it.

Internal labor markets are another form of untapped talent. Rubin says internal hiring for open roles has fallen sharply in the United States, to about half the rate of two decades ago. Organizations may therefore be overlooking people who already know the business, may be ready for advancement, and may be stuck in roles below their capabilities. Employees who regard their workplace positively can also be a recruiting channel because they bring family and community relationships with them. That channel works only when employees actually think the organization is a good place to work.

Jerry Rubin points to Optimax, a precision-lens company in Rochester, New York, as an illustration of a deeper employer–education partnership. The company has developed ongoing relationships with high schools, two-year institutions, and four-year institutions. Its own employees participate as faculty, help shape curricula, and connect students to internships and permanent jobs. Rubin describes a cycle in which education partners understand the company’s needs, students see a route into work, and the company builds a more reliable talent pipeline.

Steve Dawson emphasizes that Optimax goes further than the familiar sequence in which people enroll in a community-college program, acquire training, and then seek a job. Optimax hires workers first, designs training jointly with the college, uses company employees as faculty in some programs, and has new hires complete the training knowing they have a job with the company. Dawson describes it as turning workforce development “on its head”—a demand-pull model rather than a supply-push model.

Workers are paid while they train and have a defined employment destination. The employer helps determine what training covers and receives workers prepared for its actual jobs. Dawson says he saw the same approach in work with Jewish Vocational Service: people were hired first, trained afterward, and paid by the employer through the training period.

For higher-education and training institutions, Rubin’s advice is blunt: listen more than you talk, and underpromise and overdeliver. Providers run into trouble when selling a service takes precedence over understanding the employer’s actual problem. Employers have alternatives, he notes, and will not necessarily value a standard offering that does not address the issues keeping them up at night.

The reciprocal obligation is just as important. Employers cannot expect community colleges or other providers to produce exactly the talent they need unless they participate in identifying needs, shaping curricula, and sometimes helping secure resources for facilities and training. Optimax, Rubin says, has done each of those things. The quality of the partnership depends on culture at both institutions: some educational organizations are rigid about established processes, while others begin with a more useful question—what do you need us to do?

Hiring into a tight labor market is difficult; losing people shortly afterward compounds the problem. Retention and job redesign therefore sit at the center of an employee-centered strategy.

Jerry Rubin describes Little Sprouts, a 1,200-employee child-care company operating across New England, as an example. Founded in 1982 and later acquired by a French private-equity company specializing in child care, Little Sprouts faced severe recruitment and retention pressure during and after COVID. Child care is an underpaid field, Rubin says, despite the high expectations placed on workers. Reopening after shutdowns added another layer of anxiety and staffing difficulty.

Little Sprouts partnered with JVS Boston and used a job-quality benchmarking index that let the company assess itself across five or six major areas of job quality and compare its performance with peers in its industry. The company then raised wages, expanded benefits, and developed staff leadership programming. It also offered employees a substantial discount for enrolling their own children in its centers.

Rubin also cites a 20% improvement in employee retention after the redesign effort. The discounted child-care benefit draws on an advantage specific to a child-care provider. The benchmarking process is more general: it gave the company a view of its own wages, benefits, and other practices beside those of industry peers, while also identifying both relatively accessible improvements and more costly changes.

Some improvements require little more than management attention. Listening to employees, changing communication practices, and giving workers a role in identifying operational problems do not substitute for higher wages where wages are inadequate. But they are part of making jobs sustainable rather than merely filling vacancies.

Steve Dawson cautions against treating any one intervention as universally applicable. Different industries, regions, organizations, and workforces face different constraints. The book offers more than 20 short case studies from organizations of different sizes and sectors, along with resources employers can pursue after they understand their own situation.

The starting point is not a consultant’s framework; it is the organization’s existing workforce. Employers should ask what makes it difficult to stay, what obstacles workers encounter, and what changes they believe would improve the work. Dawson treats that as the beginning of an ongoing conversation, not a one-time survey. Information needs to move from the front line and middle management upward, not simply from executives downward.

Possible responses range from a company child-care program to a modest fund that helps employees make a down payment on a car. Employee ownership is another option the speakers identify as a way to increase retention, buy-in, and the relationship between workers and employers. The point is not that every organization should adopt the same program. It is that employers need to identify the particular frictions that make work unsustainable and begin testing responses to them.

Employers often ask whether they can quantify the return on investments in wages, training, job redesign, or employee ownership. Steve Dawson says the evidence can be useful: there are business cases showing productivity and profitability gains from better compensation, increased training, and different ownership structures. But he argues that a rational return-on-investment case is necessary and “totally insufficient.”

Organizations resist change for practical, structural, and personal reasons. Leaders may acknowledge that a proposed approach makes sense while responding that they have tried something similar before, that their organization is different, or that other pressures are more urgent. Dawson compares this to the gap between knowing that healthier behavior would improve one’s health and actually changing behavior. Information does not automatically produce action.

Some constraints require action beyond an individual employer. In long-term care, Dawson notes, state scope-of-practice regulations may prevent a trained home-care aide from performing tasks as simple as administering eye drops, reserving that task for a nurse. An employer can redesign supervision, communication, and incentives, but it cannot by itself change the regulatory boundary of a job.

Other barriers are directly embedded in management practice. Change efforts often seek support from the chief executive and input from frontline employees while overlooking middle managers. But middle managers are responsible for supervision, quality control, and implementation. If they are not involved in diagnosing problems and designing the response, Dawson says, they may offer passive resistance or active resistance.

There is also a more fundamental social divide. Senior leaders and frontline workers frequently come from different class backgrounds, Dawson says, and that difference can produce a gulf in understanding. In researching the book, the authors heard of managers who were literally reluctant to go onto the shop floor or did not know how to speak with frontline staff. Gender, racial, and class bias can all shape whose knowledge is treated as valuable and who is considered capable of autonomy.

In larger organizations, incentive systems can pull managers away from long-term retention. Managers may receive bonuses for keeping labor costs low relative to sales, often assessed quarter by quarter. That rewards immediate labor-cost reductions even when durable improvements in retention require investment over a longer period. Revising such incentives is an employer-controlled decision; it changes what managers are rewarded to prioritize.

For practitioners working with employers, the task is not to arrive with a study and demand compliance. Dawson argues for a relationship-based approach: understand the employer’s business, pressures, internal dynamics, and constraints; determine whether managers have genuine relationships with staff; and address resistance respectfully rather than deferentially.

Jerry Rubin adds that comparative data can be more motivating than an abstract ROI calculation. Little Sprouts’ benchmarking tool let the company see its pay, benefits, and other practices against those of specific industry peers. A company that sees itself falling behind competitors has a more concrete reason to reconsider its own practices than one handed a generalized financial projection.

The employee-centered argument is not limited to large corporations. Rubin defines an employer simply as anyone who employs people: for-profit firms, nonprofit organizations, and public agencies alike. He notes that nonprofit does not necessarily mean small; Massachusetts’s largest private employer is a nonprofit hospital system.

Steve Dawson says 40% of U.S. employees work for companies with 50 workers or fewer—about 55 million people. Small proprietors, nonprofits, and agencies with 50 or 100 staff compete for talent and absorb the costs of turnover just as larger employers do.

A small nonprofit may not be able to match the pay of a larger company. But Rubin says JVS first used its job-quality index on itself, asking staff to assess the organization and comparing its performance with other nonprofits. The exercise surfaced changes that were not necessarily expensive. Talking to employees and listening to them costs time, he says, but not money; the larger issue is organizational attitude and culture.

The speakers do not present listening as a substitute for higher wages where wages are inadequate. Little Sprouts raised pay, and both authors treat compensation as central. Their point is narrower: limited budgets do not eliminate an employer’s responsibility to examine hiring, retention, communication, advancement, autonomy, and the conditions that make people leave.