The labor force is shrinking. These 3 practices can help employers adapt to talent shortages.

Do you think AI is the biggest threat to the labor market? Experts say, think again, it might be a smaller piece of the problem

Demographic changes may actually pose a greater risk, according to Svenja Gudell, Indeed’s chief economist.

Labor shortages stemming from falling fertility rates, rising baby boomer retirements, and declining immigration loom large over the US job market. The civilian labor force shrank from 171.5 million to 169.7 million between December and August, according to the Bureau of Labor Statistics. By around 2030, it’s projected that there will be more deaths than births in the US, Reuters recently reported.

“That’s a pretty big deal, because this stuff usually doesn’t happen. Our population has continuously grown, and sure, during history there were a bunch of dips along the way, but nothing like what is happening right now,” Gudell told an audience of HR and talent acquisition (TA) leaders during a keynote address at Indeed’s Futureworks conference in Phoenix last week.

And while some sectors may be able to use AI to perform or augment certain tasks associated with unfilled roles, industries less exposed to AI—including education, healthcare, and manufacturing—are expected to be hit hardest by demographic shifts, Indeed data found.

To minimize labor shortage pains, employers must rethink who they hire, and how they attract talent. In her keynote and interview with HR Brew, Gudell shared three practices that HR leaders could adopt to get started.

Look at the work people can actually do. Rather than making hiring decisions based on candidates’ current or previous job titles, Gudell said TA teams should compare their skills with those required of open jobs.

“As you’re hiring someone, don’t try to look for the exact title you’re trying to hire,” Gudell said. “Look for the person that has the skills to do the job. Can they actually perform all the tasks? That’s what you need to look for, not the title.”

This is where understanding transferable skills will be important. Some industries, like childcare, are finding success in hiring talent with transferable skills from outside the profession. Just 19% of workers hired into a childcare role between 2022 and 2024 came directly from another one, while the majority came from at least nine other professions, including education, retail, and food prep and service, according to Indeed.

“There’s a signal within there that clearly there are transferable skills between education or retail and childcare,” Cory Hopkins, managing editor at Indeed’s Hiring Lab, told HR Brew. Those skills “help make it not a closed loop, but more of an open funnel, if you just get out of your own space a little bit and consider, well, wait, where else are these skills located beyond childcare?”

Read between the lines. Similarly, TA teams shouldn’t base their assumptions about candidates’ qualifications on their educational attainment. A college degree (or lack thereof) has become less indicative of actual knowledge and skills.

“[A degree] doesn’t tell you quite as much today as it did back in the day,” Gudell said. “We’ve talked a lot about skills-first hiring and all these things, because the number of years of experience and the degree and anything else listed on the résumé might not be quite as important anymore. It’s really about what can be done in practice.”

Employers need to take the time to actually develop talent through upskilling or reskilling. The US education system isn’t preparing students to work in sectors expected to be hit hardest by demographic changes, Gudell said. Additionally, the requirements associated with some roles create barriers to entry. Take nurses, for example, who must complete an education and obtain a license in nursing. Around 70% of those in a nursing role came directly from another one, and will move to another when they leave, the same research from Indeed found.

“There are not a whole lot of other occupations that flow into that nursing loop, and that kind of makes sense if you think about the training and education that goes into being a nurse. Once you’ve accomplished that, you will of course want to probably stay with that degree, that occupation, and not move somewhere else,” Gudell said. “And that is exactly the problem we’re going to have to solve. We don’t want to lock people into one area if we need them to move into another area.”

Expand the perks, expand your talent pool. Employers can attract more candidates by offering the pay, perks, or benefits they actually desire, from higher compensation and remote or flexible work to perks that might be more feasible for some employers, like healthcare or PTO.

“Benefits really do matter and can do a lot for you, and are a really important aspect of considering how to attract different people in your talent pool,” Gudell said.