BlueSky Thinking Summary

This article explores how steeper pay incentives can backfire in the hiring process.

Conventional wisdom assumes that higher rewards will naturally attract top talent.

Yet research by Georgiadis and Castro?Pires reveals that offering larger incentives also draws more low?skilled applicants.

When selection depends on sorting by ability, simply increasing pay may dilute the candidate pool.

The result is a potential decline in workforce quality along with rising labor costs.

The study concludes that escalating pay for its own sake is not a fix for hiring challenges.

Organizations must instead design holistic recruitment strategies that extend beyond financial incentives—such as targeted outreach, skill assessments, and employer branding—to attract truly skilled talent.

In short, pay alone cannot solve hiring problems and might make them worse.

A smart approach balances compensation with thoughtful selection tools and market positioning to build a stronger workforce.