According to a recent article in The New York Times, unemployed people looking to get back into the workforce may find that companies are much more interested in candidates who already hold jobs. It’s not an “Unemployed Need Not Apply” situation, but nor is it a welcome mat for those hardest hit by the sputtering economy.
“Given that the average duration of unemployment is nine months — a record high — limiting a search to the ‘recently employed’,’ much less the currently employed, disqualifies millions,” noted the Times, which reviewed recent online job vacancy postings as part of its research.
For many unemployed, it is a vicious cycle: They can’t get hired because they may have fallen slightly behind on their job skills, but they can’t get up to speed on these skills unless they land a job. A recent Knowledge at Wharton article acknowledged the dilemma: “As a growing number of workers languish on the unemployment rolls for months or years, the danger is that they will become permanently jobless because they lack the skills to get hired once the jobs return.”
In addition, experts interviewed by the Times doubted whether such bias on the part of employers is considered discriminatory, although New Jersey passed a law “outlawing job ads that bar unemployed workers from applying,” and similar action is being considered by other states as well as the U.S. Congress.
Job figures released today by the U.S. Labor Department showed employers added 117,000 new jobs during the month of July, enough to bring the unemployment rate down from 9.2% to 9.1%, but not enough to signal a major shift in the economy.
Knowledge/Today asked Wharton management professor Matthew Bidwell for his thoughts on the unemployment situation.
Knowledge/Today: Do you feel there is some justification for an employer’s decision to favor the employed? Is it a form of discrimination or just a smart business decision?
Bidwell: Both. It is a form of discrimination, but one that makes some sense. There are lots of reasons that people end up unemployed, including their position being eliminated, their department being closed down or their whole company going bankrupt. When companies choose to downsize some of their workers though, they will usually seek to retain their higher performers (of course, how they define their higher performers can also be a highly political process). Nonetheless, potential employers are aware that the people who are let go first may be those who were not performing well in their prior job. Moreover, the fact that they could not instantly find a job suggests that they did not have a strong enough reputation [to be quickly] snapped up by another employer.
I should emphasize that being unemployed is a very noisy signal of quality. There are many reasons why workers might be unemployed despite being stellar performers. But most of the signals that employers rely on in hiring are pretty noisy, since they don’t have direct experience with the worker. It therefore makes sense for the employer to be discriminating against the unemployed, even though many of the unemployed would make excellent hires.
Knowledge/Today: Are employers actually the ones who may lose out in the long run because they are bypassing people in the workforce who might be willing to work longer hours for less pay?
Bidwell: That’s possible. Given the state of the job market though, employers already have a huge amount of bargaining power and are able to fill jobs easily. So the sad truth is that employers probably aren’t missing out all that much.
Knowledge/Today: How would you advise an unemployed person to present themselves in this job market, knowing there might be reluctance on the part of employers to hire them?
Bidwell: A lot of people try to mask their unemployment in various ways. Among executives, a lot of people will set up as independent consultants. Regardless of how much business they get, it allows them to appear employed while they search for work. Returning to school is another strategy, although obviously that is expensive.
Knowledge/Today: Is there a “solution” to this dilemma for those seeking jobs, or is it one of many intractable problems facing our workforce today?
Bidwell: A better job market. Some people describe applying for jobs as a process of queueing, where the most attractive applicants go to the front of the queue and the least attractive go to the back. As people spend time in unemployment, they get shuffled towards the back of the queue. The problem at the moment is that employers only need to look near the front of the queue to meet their demands. Until hiring picks up and employers are forced to consider a wider range of people for their jobs, I think it will continue to be hard for unemployed workers.
