The Employment Catch-22: Why You Need a Job to Get a Job

This bias toward employed candidates (sometimes called passive candidates) might sound counterintuitive. It’s often assumed that companies want people who are ready to start immediately (and who will be more grateful for the opportunity, which unemployed people are often assumed to be).

However, hiring is an expensive gamble, and unemployed candidates are sometimes perceived as riskier. Essentially, if you don’t have a job, companies will think there’s something wrong with you.

“Baby, we’re not giving out charity,” said Anna Papalia, career coach and CEO and founder of Interviewology, a boutique consulting firm for job seekers and hiring managers. “Is it fair? No. But there are a lot of biases in the corporate hiring process that aren’t fair.”

How expensive is recruiting?

According to data from the Society for Human Resource Management (SHRM), the average cost of hiring someone is nearly $4,700. When you factor in “soft costs”—like the time spent screening applications and interviewing—some experts estimate that the total cost to fill a role can be three to four times the position’s salary. 1

This means that a company could end up spending around $180,000 when hiring for a role with a $60,000 salary.

With that much money on the line, recruiters often default to fear-based filtering.

As former Forbes contributor Liz Ryan wrote, “The fear of making a hiring mistake is so pervasive that some employers judge job applicants by their employment status, although it has nothing to do with their talent or intelligence.”

Why is being unemployed seen as a risk?

Being employed is basically an ongoing endorsement of your employability. It suggests you’re reliable, skilled, and most importantly, vetted.

If another company is currently paying you, a recruiter assumes you must be doing something right. In theory, being currently employed also means you’re using and even improving on your professional or technical skills.

To a hiring manager, having a job makes you a safer bet.

This logic can create a harsh social stigma that leaves some unemployed job seekers feeling as if recruiters avoid them “like a cat avoids a bath.”

Because of these beliefs, being unemployed is considered a red flag that may prolong your job search.

“It takes 2 to 3 times longer to find a job when you are unemployed,” Papalia wrote. She also noted that companies tend to give unemployed workers worse offers and that the longer you go without work, the lower your chances are of getting an interview.

If possible, Papalia advised, you shouldn’t quit your job until you have a new one lined up.

Putting disclaimers on the job post is the most obvious way companies make it clear that the jobless need not apply.

Here’s a real-life example from a role we found on a job board:

By requiring current employment and noting that a “non-compete” is preferred, the company can pull talent directly from a competitor’s roster rather than evaluate the broader pool of available, qualified experts (which includes people who may have been caught in layoffs).

Other methods of filtering out the unemployed

Anecdotally, job seekers also report a few different approaches.

In one Reddit post, a user mentioned that some application forms asked for their role at their current company and made it a required field. Frustratingly, some forms tacked this step on at the very end of the application process.

“You can fill out the whole damn form only to have a pop say ‘List the company you’re currently employed at,’” they wrote.

In the eyes of many job seekers, this is a ridiculous screening criterion.

Online communities like Reddit’s r/recruitinghell feature many posts discussing the trend.

Some fully employed professionals consider the bias so absurd that they are joining in the discussion, too. Jessica Winder, the chief people officer at Winder Law Firm, made a LinkedIn post asking, “What in the tomfoolery is going on?”

Winder’s post included a meme highlighting how companies create barriers for qualified talent, only to complain that they can’t find enough qualified workers.

Should job seekers apply for these jobs anyway?

When you see a disclaimer about unemployed candidates, your first instinct might be to close the tab. No one wants to waste their time on a company that has already voted “no” based on their current status.

However, some candidates are inclined to apply anyway.

There’s no harm in applying.

The reality of job descriptions is that they are sometimes “wish lists” for candidates, not necessarily hard requirements. A hiring manager might like your skill set enough to give you a chance, even if there’s something about you that the job posting said was disqualifying.

If you’re the perfect fit for the role, a rational manager may ignore the “currently employed” rule to get you on the team.

Currently, there are no federal laws in the US explicitly barring private employers from engaging in unemployment discrimination.

However, according to the US Equal Employment Opportunity Commission (EEOC), this discrimination can become illegal if companies use an applicant’s employment status as an excuse to filter out candidates of a specific race, religion, sex, or age group. 2

In other words, a company’s policy of rejecting unemployed applicants is illegal if it disproportionately affects a protected group (like a certain race or gender) and the employer cannot prove that the filter helps them identify “reliable” employees.

Companies must also make certain exceptions to these policies, even when they’re legal. If a candidate’s gap in employment was caused by a disability, employers are often required by law to make exceptions to “must be currently employed” policies.

By filtering for only currently employed people, companies may lose out on candidates who are even more qualified, motivated, and ready to start immediately.

Targeting exclusively passive employees can actually make the hiring process even more expensive.

Research shows that 87% of talent professionals find it at least as expensive to recruit passive talent as active seekers. Even among applicants who are employed, 28% who are actively looking for a job expect at least a 15% salary increase to switch jobs, compared to 32% of passive candidates who aren’t looking. 3

To beat a system biased toward the “currently employed,” you have to manage your image across three stages: the algorithm, the network, and the interview.

Stage 1: How to handle the algorithm

Because some recruiters are biased toward passive (employed) candidates, being too vocal about your job search can backfire. For example, career coach Robert Hellmann warned that LinkedIn’s popular “Open to Work” green banner can be a double-edged sword.

“Employers or recruiters may actually be turned off by the open-to-work designation because of the well-known preference for ‘passive candidates,’” Hellmann explained in one Forbes article. He likened the job market to dating: sometimes, you have to play hard to get.

Hellmann suggested that direct outreach—emails or messages to your network—can be a more effective job-hunting strategy.

How to fill out “current position” fields on applications

When filling out applications, never leave your “current” position blank. If you’re between roles, write that you are a freelancer or consultant. List your side hustles or recent freelance projects as your current role to bypass automated filters.

Be prepared for companies to ask for proof, though. This means being ready to provide pay stubs, 1099 forms, or other documentation proving that you’ve actually been working.

Stage 2: How to network

As noted in one Business Insider article, people become disinterested when they find out you don’t have a job. To combat this, frame your situation as a choice rather than a misfortune when you’re networking.

Don’t say you’re unemployed. You can be upfront by saying you’re “on the market” instead. If you want to make it sound like you have more concrete choices, you can say, “I’ve got a couple of options brewing. Haven’t decided what to do yet.”

This can mimic the high-value “passive candidate” aura that recruiters like.

Stage 3: How to handle the interview

If you do manage to land an interview and are asked about an employment gap, don’t panic. Just follow the 90/10 rule.

Career expert Erin McGoff explained that you should spend 10% of your answer explaining the gap and 90% talking about your skills and professional development.

“Your goal is to provide an answer that makes them think, ‘Oh, that makes sense. That’s not a red flag at all,’” McGoff told CNBC.

For example, if you were laid off, keep it short and sweet and say something like, “I really loved my previous role. Unfortunately, I was affected by company-wide restructuring.”

McGoff suggested showcasing how you stayed sharp during your hiatus, whether through freelance projects, professional workshops, or keeping up with industry news and best practices.