The Top 10 States Facing Talent Shortages in 2025

In 2025, America’s job market is a tale of two economies — booming in some states, bottlenecked in others. While certain regions enjoy a surplus of skilled workers, others are stuck in a hiring gridlock, with employers scrambling to fill roles from a shrinking talent pool. 

For businesses in these high-pressure regions, the battle for top talent is real.

This article breaks down the states hit hardest by labor shortages and delivers practical, high-impact strategies to help employers stay competitive, staffed, and ahead of the curve in 2025 and beyond.

Which States are Facing the Greatest Hiring Challenges?

Recent data highlights a group of states where employers are contending with some of the highest job opening rates in the country, signaling a persistent mismatch between labor supply and demand. 

According to a February 2025 WalletHub report, these ten states stand out for their hiring difficulties:

1. Kentucky – Job openings rate: 6.50%

2. Alaska – Job openings rate: 6.00%

3. West Virginia – Job openings rate: 5.90%

4. South Carolina – Job openings rate: 5.70%

5. Arkansas – Job openings rate: 5.70%

6. Virginia – Job openings rate: 5.60%

7. Georgia – Job openings rate: 5.70%

8. Oklahoma – Job openings rate: 5.40%

9. New Mexico – Job openings rate: 5.40%

10. Louisiana – Job openings rate: 5.40%

The drivers behind these shortages vary across regions, but a few themes consistently emerge, including demographic stagnation, sector-specific strain, and geographic isolation.

Contributing Factors to Regional Labor Shortages

For the hardest-hit states, several factors contribute to their hiring difficulties:

• Demographic Shifts: An aging population and declining birth rates have led to a reduced workforce in certain states. Specifically, Kentucky, West Virginia, and Arkansas struggle with aging populations and lower educational attainment, limiting the availability of skilled labor for in-demand roles. These states also have some of the lowest labor force participation rates in the U.S., often under 58%, compared to the national average of 62.5% (BLS, 2025). Healthcare, skilled trades, and logistics jobs are especially hard to fill in these areas.

• Outmigration and Remoteness: Alaska and New Mexico face challenges tied to geographic remoteness and population decline. Alaska’s harsh climate and isolated communities deter in-migration, while New Mexico continues to see net outbound migration and a shrinking pipeline of younger workers. Both states also report shortages in healthcare, education, and construction.

• Industry-Specific Demands: Certain regions face acute shortages in sectors like manufacturing, construction, and healthcare, where specialized skills are in high demand. Oklahoma and Louisiana are contending with the decline of legacy industries (like oil and gas) while struggling to retrain workers for growing sectors like healthcare and IT. In rural areas of both states, broadband limitations and infrastructure gaps further restrict access to remote jobs and skills training.

• Growth Outpaces Labor Supply: States including South Carolina, Georgia, and Virginia have experienced rapid economic growth, particularly in advanced manufacturing, logistics, and tech. However, workforce development hasn’t kept pace, creating a supply-demand mismatch. South Carolina, for example, has over 2.3 job openings per unemployed person (U.S. Chamber, 2025), signaling severe strain.

In all cases, the result is the same: a glut of open roles and not enough qualified, willing, or available workers to fill them.

6 Ways to Compete for Talent in a Tight Job Market

To combat these challenges, employers can adopt several proactive strategies to attract talent and stand out among competitors:

1. Invest in Employee Training and Development
   
   When external hiring becomes difficult, one of the most effective ways to fill talent gaps is by developing the team you already have. Rather than relying on occasional workshops, employers should create a structured, ongoing learning environment that includes upskilling, cross-training, and leadership development programs.

   A learning management system (LMS) can support this effort by tracking employee progress and delivering personalized content aligned with individual goals. Employers can also offer stipends for external certifications, promote from within whenever possible, and establish clear career pathways. 

   These professional development strategies not only build critical skills to help employees in their current position but also help employees see a long-term future and growth with the company — which can in turn boost both retention and performance.
   

2. Enhance Recruitment Processes
   
   Once you have addressed any talent gaps in your existing workforce, focus on streamlining and modernizing your recruitment funnel to reduce time-to-hire and improve candidate quality. Implement applicant tracking systems (ATS) that integrate with AI tools to auto-screen resumes, predict fit, and schedule interviews – but continue to do so with careful human oversight.
   
   Audit your job descriptions and remove jargon and buzzwords or outdated requirements that create unnecessary barriers – many companies are now dropping traditional requirements like college degrees in order to attract a wider talent pool. Use data analytics to identify high-performing hiring sources and double down on those channels.
   
   

3. Offer Flexible Work Arrangements
   
   Flexibility is no longer a perk; it’s a baseline expectation, particularly in the wake of pandemic-era working arrangements. The U.S. Chamber of Commerce notes that flexible work is one of the top solutions to labor shortages, especially among younger and mid-career workers seeking better work-life integration.
   
   Strive to offer remote or hybrid models where feasible, and supplement with flexible hours, condensed workweeks, or output-based performance tracking. This will attract geographically diverse talent while also improving inclusivity for parents, caregivers, and those with disabilities or health concerns.
   

4. Expand Talent Pools
   
   For those struggling with a thin talent pool, challenge traditional candidate filters by considering retirees, career switchers, and those with unconventional backgrounds.
   If you are unsure where to start, partner with community organizations or workforce development boards to access these overlooked groups. 

   For example, your organization can create “returnship” programs for retirees or mid-career professionals who are re-entering the workforce. A ResumeBuilder survey found that 1 in 8 retirees plans to return to work in 2025, largely due to inflation, presenting a timely opportunity to tap into a highly experienced labor segment.
   

5. Strengthen Employer Branding
   
   In a competitive labor market, a strong employer brand can be a powerful differentiator. Companies that clearly communicate their culture, values, and mission are more likely to attract candidates who align with their vision and are motivated to contribute.
   
   Highlighting employee stories, showcasing workplace culture on social media, and maintaining a compelling careers page can all help build credibility and interest among job seekers that showcase your organization as a desirable place to work and build a career. According to Mercer’s Global Talent Trends report, employer branding plays a critical role in attracting and retaining top talent — making it a priority for any organization facing hiring challenges.

6. Leverage Apprenticeship Programs
   
   For skilled trades and other industries facing a lack of qualified talent, apprenticeship and internship programs offer a long-term solution to labor shortages by building a pipeline of skilled workers trained to meet specific industry needs. These programs combine hands-on experience with structured learning, allowing employers to shape talent from the ground up.

Organizations like Northwest Michigan Works! provide support and resources to help businesses launch registered apprenticeship programs tailored to their workforce demands. To find local programs, check the ApprenticeshipUSA website along with local government websites, colleges, universities, and trade schools.

Final Thoughts

The states facing the sharpest labor shortages in 2025 reveal a clear pattern: when demand outpaces supply, traditional hiring methods break down. Employers must take a multi-pronged approach to this challenge by reskilling internal teams, expanding candidate pools, modernizing processes, and creating strong employer brands. 

In a tight labor market, the most effective hiring strategy is one rooted in long-term value, not short-term fixes; which is why the sooner companies pivot, the more likely they are to stay fully staffed and competitive in the coming years.