| Oct 31, 2022

Could Refugees Be the Solution to Tight Labor Market?

With fewer people available to fill job vacancies and high employee turnover, businesses are being encouraged to tap into alternative talent pools.

Let’s put it this way. If the US labor market gets any hotter, the line for your morning coffee and toast at the local café might get even longer. Businesses are struggling to find employees to fill vacancies and hired more workers in September than estimated. The market has proved incredibly resilient even as the Fed has maintained its hawkish stance on interest-rate hikes. 

While the hikes are aimed at controlling inflation, the expected slowdown in economic demand is yet to be realized. The leisure and hospitality sector, for instance, added 83,000 jobs and still remains 1.1 million jobs below reaching its pre-pandemic level. While this sort of uptick in vacancies is not reflected across all sectors, many are continuing to add jobs. The problem is that we have fewer people available to fill those jobs, with a tight labor market and unemployment hovering around just 3.5%. In such a scenario, creative solutions to the labor crisis are required. 

Quitting (Quiet and Vocal) Haunts Footsteps of Businesses 

Employee turnover has been a hot-button issue in the US since the pandemic. Many companies have found themselves caught off-guard by worker movements such as the Great Resignation and the latest storm on socials around quiet quitting. Employees have switched jobs in droves since the onset of the pandemic and demanded a better work-life balance as a core job requirement. This has led companies to offer higher packages and better perks and benefits to hang on to their best talent. 

Although recessionary fears have helped slow the trend, companies that have recruited talent at higher packages amid the talent crunch are under considerable pressure with inflation refusing to die down. Quitting, both quiet and vocal, are giving businesses a runaround they have rarely experienced before.


Why Do We Need Alternative Talent Pools?

While many companies are betting on automation to address tight labor conditions, hyper-automation at scale is still a few years away. It may not be a suitable solution for businesses of all sizes. Moreover, in terms of technical capacity, we are still in the early stages of automation that continue to depend on at least some level of human intervention. And not all jobs can (or should) be automated

This is where tapping into alternative talent pools, such as a workforce comprised of refugee workers and people who don’t speak English as their primary language, could offer a solution. The Coalition for Refugees in the U.S., an initiative by the Tent Partnership for Refugees (Tent), enables companies to do just that. Tent, a nonprofit, is the brainchild of billionaire Hamdi Ulukaya, the founder of Chobani yogurt. More than 100 US companies including Amazon, Facebook, Pfizer, Tyson Foods, and UPS have already joined the coalition. 

Hiring Refugees Can Help Lower Employee Turnover

The business cost of employee replacement is only climbing higher and higher with the dual pincers of a hot labor market and inflation, with costs estimated around:  

  • $1,500 for hourly employees.
  • 100% to 150% of annual packages (technical positions).
  • Up to 213% of annual packages (C-suite positions).

The frequent need for employee replacements and high employee turnovers can also result in lower employee morale and productivity. This picture seems starkly different when it comes to refugee workers. According to a study conducted by the Fiscal Policy Institute and commissioned by Tent, the average turnover rate for refugees at manufacturing companies in popular refugee resettlement areas including Atlanta, Phoenix, upstate New York, and central Nebraska hovered around 4% — a drastically lower figure than the standard of 11% for all employees. 

The majority of employers surveyed across industries (73%) agree that they have seen much higher retention rates for refugees compared to other employees. 

While it may not be the end-all and be-all solution for all businesses, there is no denying that higher retention rates could save businesses a tidy chunk at a time when inflation is eating into margins aggressively. Sectors such as manufacturing that do not require proficiency in language skills could stand to benefit hugely from recruiting refugee workers, and companies like GE Appliances (owned by Haier) have already set in motion processes to hire 1000 migrant workers by 2023. With the Biden Administration’s redoubled emphasis on manufacturing, this could prove to be a competitive benefit that businesses cannot afford to overlook. 

Taking On the Role of a Friend in Need

Finally, offering a migrant a job and investing in their career development could just be a humane and ethical course of action. At a time when the number of refugees are swelling worldwide, thanks to the Afghan and Ukrainian crises, it may make business and ethical sense for companies to accommodate a few of the 27.1 million (worldwide, pre-Ukraine) refugees, as reported by the UNHCR. When opportunities are scarce in their adopted home, migrant workers tend to develop a deeper bond with the companies they work for, tend to stay on longer, and even evolve into taking on leadership roles. All that is really required of companies is to provide migrant workers with a stable work environment, free of persecution and prejudice.

Anindita Biswas

Opinion Contributor, Strixus

Anindita (Andy) is a writer and communications lecturer with over a decade of experience in B2B enterprise technology, specializing in thought leadership content for Fortune 100 executives. view profile


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