Automated resume-scanning software is contributing to a “broken” hiring system in the US, says a new report from Harvard Business School.

Such software is used by employers to filter job applicants, but is mistakenly rejecting millions of viable candidates, say the study’s authors. It’s contributing to the problem of “hidden workers” — individuals who are able and willing to work, but remain locked out of jobs by structural problems in the labor market.

The study’s authors identify a number of factors blocking people from employment, but say automated hiring software is one of the biggest.

These programs are used by 75 percent of US employers (rising to 99 percent of Fortune 500 companies), and were adopted in response to a rise in digital job applications from the ‘90s onwards. Technology has made it easier for people to apply for jobs, but also easier for companies to reject them.

The exact mechanics of how automated software mistakenly reject candidates are varied, but generally stem from the use of overly-simplistic criteria to divide “good” and “bad” applicants.

For example, some systems automatically reject candidates with gaps of longer than six months in their employment history, without ever asking the cause of this absence. It might be due to a pregnancy, because they were caring for an ill family member, or simply because of difficulty finding a job in a recession.

More specific examples cited by one of the study’s author, Joseph Miller, in an interview with The Wall Street Journal include hospitals who only accepted candidates with experience in “computer programming” on their CV, when all they needed were workers to enter patient data into a computer.

Or, a company that rejected applicants for a retail clerk position if they didn’t list “floor-buffing” as one of their skills, even when candidates’ resumes matched every other desired criteria.

Over-reliance on software in the hiring world seems to have created a vicious cycle. Digital technology was supposed to make it easier for companies to find suitable job candidates, but instead it’s contributed to a surfeit of applicants. In the early 2010s, the average corporate job posting attracted 120 applicants, says the study, but by the end of the decade this figure had risen to 250 applicants per job.

Companies have responded to this deluge by deploying brutally rigid filters in their automated filtering software. This has had the effect of rejecting viable candidates, contributing to the large pool of job-seekers.

The use of this software has become a huge business in itself. As the report notes: “Over the intervening years, automation has come to pervade almost every step in the recruiting process: applicant tracking systems, candidate relationship management, scheduling, background checks, sourcing candidates, and assessments. The global recruitment technology market had grown to $1.75 billion by 2017 and is expected to nearly double, to $3.1 billion, by 2025.”

Despite this, companies seem well aware of these problems. Nearly nine out of 10 executives surveyed for the report said they knew automated software was mistakenly filtering out viable candidates, with some saying they were exploring alternate ways to hire candidates.

But, as the study’s authors note, fixing these problems will require “overhauling many aspects of the hiring system,” from where companies look for candidates in the first place to how they deploy software in the process.