If you’re struggling to hire or hold onto the right people, you’re not alone. Across the country, employers are scrambling to find qualified candidates, while employees and job seekers worry whether their jobs will still exist next year. Both sides sense a crisis, and they aren’t wrong.
The U.S. has about 7.8 million open jobs, and nearly the same number of people are looking for work. But something isn’t lining up. There’s a growing mismatch between who’s available and what businesses actually need.
This isn’t a short-term hiring challenge. It’s the result of deeper, structural changes in the labor market, and it won’t fix itself. For every open role or under-skilled employee, there’s a real financial hit, like project delays, overtime premiums, compliance risks, and lost revenue.
Companies that treat staffing gaps as just an HR issue are already losing ground. The ones that treat talent as a strategic investment will be the ones that stay competitive. But to do that, you need to see what is really reshaping the labor market, size up its impact on your margins, and build a plan of attack.
Understand what’s changing the labor market
The first step is clarity. There are four primary forces disrupting labor markets. And it’s largely up to business leaders to address them within their organizations.
Retirements are accelerating
In 2025, about 11,400 Americans will turn 65 every single day. That pace will stay elevated for the rest of the decade because it’s a direct echo of the birth-rate surge of the 1940s through the 60s. No younger cohort has come close to matching those birth totals, and rising life expectancy means retirees now spend far more years outside the workforce than their parents did. In almost half of US counties people aged 65 and older already outnumber children under 18. That imbalance is not a passing wave, it’s the new baseline, and it puts pressure on labor supply.
When a long-time employee retires, perhaps someone who’s been in your industry or company for 30 years, they don’t just leave an empty chair. They take decades of experience, training, and leadership with them. And while there are plenty of younger job-seekers, most aren’t ready to step into those shoes. The result isn’t just a headcount discrepancy; it’s a growing knowledge gap.
Immigration pipelines are strained
Immigration is often discussed in political terms, but for employers, it’s a practical workforce issue. Delays in visa processing, cap restrictions, and sudden policy shifts can introduce significant, and often unaccounted-for, costs.
Some sectors in particular, like healthcare, construction, agriculture, manufacturing, and tech, may rely heavily on foreign-born talent. When immigration channels narrow, they may face project delays, wage pressures, and higher carrying costs.
Even employers who don’t directly rely on foreign-born talent may still feel the ripple effects, especially if they depend on industries or suppliers that do.
Skill mismatch
The number of job openings roughly matches the number of unemployed people, but many candidates simply don’t meet the qualifications. High school diplomas generally don’t fill cybersecurity roles, just as machine operators can’t be swapped for robotics technicians.
The majority of roles, not just in the U.S. but globally, will require substantial re-skilling to keep up with the duties businesses need them to perform.
Technology whiplash
AI and automation are often positioned as the solution to labor shortages, but they’re also part of the disruption.
For many nearing retirement, the rapid shift toward digital tools, platforms, and machine learning isn’t necessarily a motivation to re-skill; it’s often a reason to exit early. The pace of technological change is accelerating retirements, not slowing them.
Even veteran employees who weren’t mismatched before may suddenly find themselves out of step with what their role requires. Many new roles demand data fluency, digital troubleshooting, and cross-functional collaboration. A team leader who once managed a sales floor might now be asked to help deploy AI chat agents or manage automated CRM tools, both tasks that require a different skill set.
This intersection between retirement, reskilling, and rapid tech adoption is creating a talent pinch that’s deeper than any single cause. The problem isn’t just hiring or training. It’s how fast the nature of work itself is changing.
The financial impact of a short-staffed operation
Labor gaps are easy to overlook until they show up in your P&L. Yet even when the numbers raise red flags, many leaders miss the true cause. Are you seeing rising overtime costs, temp staffing bills, or a spike in your cost of goods sold? Are project timelines slipping, adding work-in-progress inventory, and carrying costs to your balance sheet? These are often symptoms of a staffing problem.
The same goes for compliance issues, mistakes, rework, or warranty claims. These are classic signs the people doing the work don’t quite match the demands of the work itself. And the longer these mismatches persist, the more costly they become.
One more pressure point deserves special attention: strong demand can mask the damage for a while. Top-line revenue may look healthy, but if you don’t have enough of the right people in place to deliver, the business leaks value with every transaction. Growth without capacity isn’t sustainable. It’s a strain.
How to close the gap
The bottom line is that you don’t need more resumes; you need better financial visibility into what staffing gaps are costing you and a strategy to address them. Here’s how to start:
Turn vacancies into financial metrics
Every open role should be tracked in financial terms. What’s the weekly cost of a role staying vacant? How does the shortfall affect your EBITDA? How much is overtime costing you? Are vacancies affecting customer churn?
Work with finance leaders to embed these vacancy costs into your 13-week cash flow forecasts. This helps stakeholders see vacancies as a working capital issue, not just an HR problem.
Leverage tax credits
Many business leaders may overlook tax credits, like the Work Opportunity Tax Credit, that could reduce the net cost of onboarding certain employees. Veterans, candidates with state-funded technical training, or mid-career professionals who were laid off during an industry downturn could potentially qualify.
For eligible hires, you could earn a federal credit up to $2,400 for most groups and up to $9,600 for certain veterans. You may already have employees who fall into one of these eligible groups, but the credit is time-sensitive and can’t be applied retroactively.
For this reason, some companies include simple yes/no tax credit screens in their job offer packets. This data can then be sent to finance so the credit is reflected in tax forecasts and effective-rate models.
Several states offer similar incentives that can often be stacked on top of the Work Opportunity Tax Credit. When you capture both, the after-tax wage of a position can drop below market rates without cutting pay.
This is a highly simplified overview of these credits, but the point is to treat them the same way you'd treat any other potential credit. Screen every hire, route the paperwork to finance, and let your tax team run the numbers. A few minutes of processing could create savings you didn’t expect.
Re-skill when possible
Hiring isn’t always the answer. In many cases, re-training current employees costs less and delivers faster results than sourcing new ones. Instead of defaulting to external hiring, compare the cost of re-skilling versus hiring. In some cases, training investments may even be capitalized under R&D accounting rules if they’re tied to new technical capabilities.
Phased-retirement programs can also provide strategic value. As long-tenured employees approach retirement, many are eager to scale back but not necessarily walk away. Rather than lose their knowledge abruptly, consider shifting them into mentorship or training roles. It’s a way to preserve their expertise while gradually transitioning their responsibilities to newer employees.
These arrangements can ease the burden on both sides: retirees aren’t asked to overhaul their skill set late in their careers, and new team members gain direct, role-specific training from someone who’s done the job for decades.
Deploy AI thoughtfully
AI and automation can enhance productivity, but their adoption might be slow or ineffective without stakeholder buy-in. Employees may fear replacement, and seasoned leadership might not understand the technology or potential ROI.
The key is to position AI as something that can make employees’ jobs easier, enabling them to be more productive. Try piloting programs that help your existing team do more with less, and you’re much more likely to get buy-in.
Have your finance team track the investment like they would any capital expense. Some AI and software tools may be capitalized if they involve internally developed software.
Model immigration constraints as operating costs
Visa caps, processing delays, and changes in immigration policy affect many industries both directly and indirectly. And it’s not just about visas. You may have team members who had various status designations that made it legal for them to work. With many channels paused or restricted and rapid policy shifts, a workforce that was once compliant can turn into a liability overnight.
Work with your legal and Hood & Strong advisors to identify and model these risks. Do any of the policy changes apply to your workforce? If you typically hire those with work visas, what’s the cost to your firm per week of delay? If you have to replace some existing employees with other workers, what will that cost? Model the various possibilities and have a contingency plan in place.
If you can’t measure it, you can’t fix it
Labor shortages aren’t just a temporary concern; they’re a structural shift. If your business depends on people to grow, then every day you spend under-staffed or misaligned is money out the door.
Stop thinking of it as a hiring problem and start treating it as a capital allocation issue. Our advisors can help you quantify the true cost of unfilled roles and identify where to invest for improved margins and better outcomes. For more personalized guidance, please contact your Hood & Strong team.