The Paradox of Hiring the Employed Over the Unemployed

In today's competitive job market, one would think that companies would be eager to snap up talented professionals who are immediately available and ready to start contributing. After all, having an open position means lost productivity and revenue, so filling it quickly with a capable candidate should be the top priority, right?

Surprisingly, this is often not the case. Despite claiming to value immediate availability, many recruiters and hiring managers exhibit a clear bias towards candidates who are currently employed elsewhere. Those who have been out of work for a stretch of time frequently find themselves overlooked or at a distinct disadvantage during the hiring process.

This tendency to favor the already-employed is somewhat paradoxical. It's a catch-22 situation – you can't get hired without a job, but you can't get a job without already being hired. What drives this counterintuitive prejudice, and why do companies engage in such seemingly self-defeating behavior? The reasons are multi-faceted and reveal some uncomfortable truths about human psychology and flaws in hiring practices.

The Perceptions Game

A major factor is one of perception and unconscious bias. Rightly or wrongly, there is a prevailing attitude that someone who is employed must be doing something right – they are "employable" and have been validated by another company. In contrast, a candidate who has been out of work for months or years raises red flags.

"When companies see a gap in employment, they often assume the worst – that the person was fired for poor performance or has some other negative reason for being out of work," says Claire Tran, a recruiter at Apex Systems. "It creates a perception that they may not be hireable or as qualified."

This perception persists despite the myriad legitimate reasons someone may have been unemployed, such as layoffs, caring for family members, continuing education, or any number of personal situations. It doesn't necessarily reflect on their skills, work ethic, or qualifications. Yet the stigma remains, and dismissing candidates solely on the basis of unemployment status means companies could be overlooking exceptional talent.

The Implicit "Endorsement" Effect

Closely tied to the perceptions game is what could be called the implicit endorsement effect. By being currently employed, a candidate is seen as implicitly "endorsed" by their current employer. The thinking is that if they weren't any good, they wouldn't still have that job.

"There's a belief that someone's current employer has thoroughly vetted them and deemed them a valuable enough worker to keep on board," notes Karen Wilson, VP of Human Resources at SkillPath. "It's an implied endorsement that gives them an edge with other prospective employers."

The fact that the candidate was able to successfully navigate the interviewing and hiring process at their current company is seen as a positive signal as well. Ironically, this very factor that makes employed candidates appear more desirable is the same thing that creates a barrier for the unemployed attempting to get back into the workforce.

Skills Stagnation Fears

Another factor driving the preference for employed candidates is a fear that someone who has been out of work for too long may have let their skills atrophy or fallen behind the latest industry developments and best practices. This concern tends to be particularly acute in rapidly-evolving fields like technology.

"In the tech world, things move so quickly that even a relatively short gap in employment can make some employers worry that a candidate's knowledge and skills are no longer quite as current," says IT recruiter David Carlson. "They may assume that actively working professionals are more likely to have kept up with the latest languages, frameworks, and trends."

While a reasonable consideration, this assumption again does not account for people who may have spent their unemployment period purposefully upskilling, taking courses, or engaging in independent projects to maintain their expertise.

The "Hunger" Factor

From a more cynical perspective, some companies may actually prefer to hire employed candidates because of a perception that they will be "hungrier" and more motivated on the job. The thinking is that someone who was unemployed for a long stretch and desperately needed a job will be initially grateful but may eventually become complacent or revert to a lack of drive.

"A currently employed candidate who is willing to go through the risk and hassle of finding a new job is seen as showing more initiative and ambition," posits David Khanam-Blin, founder and principal recruiter at Growth Recruiters. "Companies believe they will be naturally more driven since they have already demonstrated a hunger by pursuing new opportunities."

This is an unfair generalization, of course, and stands in stark contrast to the reality that many people are incredibly hard workers, grateful for any opportunity, regardless of their prior employment situation. It is also tinged with more than a hint of exploitative attitudes.

Over-Reliance on Flawed Metrics

Much of the bias in favor of employed candidates stems from an over-reliance on flawed metrics by hiring managers and recruiters looking for shortcuts in a competitive talent landscape. Employment status becomes a misguided proxy for talent and capability, creating systematic disadvantages for individuals based on an arbitrary factor that often has no bearing on their actual qualifications.

"Because recruiters and employers are inundated with applications for most roles, they try to find quick ways to rule candidates in or out," notes Ian Siegel, CEO of recruitment analytics firm ZipRecruiter. "Employment status has unfortunately become one of those superficial screeners despite being a poor predictor of future performance."

There is also a tendency in the staffing industry to over-rely on sourcing candidates directly from competitors within an industry, rather than looking more expansively at talent pools. This self-perpetuating cycle naturally excludes unemployed individuals who are looking to transition into a new field or industry.

The Emotional Toll

Beyond just hampering companies' ability to hire top talent, the employment status bias has a significant emotional toll on individuals who have experienced periods of unemployment through no fault of their own. The constant rejections and stigma can breed frustration, resentment, demoralization, and mental health issues.

"You start to question your self-worth after getting passed over for so many opportunities just because you had a gap in employment, even though your skills are just as strong," laments software developer Alia Marshall, who was unemployed for 8 months following a layoff. "It's deeply demoralizing and makes you lose motivation to even try at times."

This very demoralization and erosion of confidence can then become a self-fulfilling prophecy, diminishing candidates' interview performance and making them appear less hireable – ironically reinforcing the very biases that created the situation in the first place.

A Way Forward

Clearly the propensity to favor employed candidates over the unemployed, despite claimed preferences, is a problematic and counterproductive phenomenon for all parties involved. It stems from deep-rooted psychological biases and flawed hiring practices, but perpetuates itself through self-reinforcing cycles that unfairly disadvantage a large segment of the workforce.

So how can companies combat this issue and ensure they are not overlooking exceptional talent? As with many embedded biases, the first step is conscious awareness of how pervasive and irrational the prejudice can be. Recruiters and hiring managers must challenge their gut assumptions about employment status as a predictor of capability or motivation.

More fundamentally, organizations need to evolve their hiring rubrics to focus solely on substantive qualifications, credentials, and demonstrated skills rather than resorting to surface-level proxies that do not tell the full story about a candidate. Expanding the candidate funnel beyond the usual sourcing channels and rethinking how opportunities are advertised and recruited for can open the aperture.

Ultimately, companies that want to gain a competitive edge would be wise to embrace a simple truth – talent is talent, regardless of current employment situation. Those that can look past the flawed heuristics and hire based solely on merit will reap the benefits of a larger, more diverse, and more capable talent pool. The paradox of favoring the employed persists for now, but it is an outdated and self-defeating practice that is ripe for change.