The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Mismatch in the Low-Wage Labor Market: Job Hiring Perspective . Employer Skill Needs and Potential "Mismatches"


Even in jobs that require relatively little in the way of formal education or credentials, employers often seek a variety of basic skills in their job applicants, and a set of personal characteristics that they think reflect those skills.(3)  The skills and characteristics generally sought by these employers can be summarized as follows:

  • Job readiness
  • Social/verbal skills
  • Basic cognitive skills
  • Job-specific skills

Job Readiness.  Given that poor work performance and employee turnover can be costly to employers (because they have to take time and spend resources recruiting and screening job applicants to replace poor workers), most want some indication that job applicants will meet at least minimal standards of performance before they are hired. These standards include showing up for work each day on time (i.e., minimal tardiness and absenteeism), having a good "attitude" or work ethic, willingness and ability to follow instructions, etc. Employers tend to judge this characteristic by looking for some stable work history and references, by avoiding those who might have substance abuse problems or criminal backgrounds, and through their own judgment of the applicant's character in an interview. Of course, employer abilities to judge job readiness from these factors might not be as strong as they think, and subjective impressions could well lead to discriminatory outcomes in some cases. For instance, roughly half of employers claim that they would not hire someone without stable work experience into noncollege jobs, and roughly two-thirds would not hire someone with a criminal record. Yet, only 35 to 40 percent use drug tests or check criminal records more formally. This suggests that some employers try to infer criminal activity and incarceration from other factors, such as gaps in an applicant's schooling and work history. The limited predictive power of employer interviews with respect to subsequent job performance has been well-documented in the human resources/personnel literature.

Social/Verbal Skills.  For jobs such as those in the clerical, sales, and service areas that involve a substantial amount of contact with customers (either in person or over the phone), employers seek at least a minimal level of social or verbal skill. These may also be needed where workers must interact with each other, in "teams" or the like. Over 70 percent of newly filled noncollege jobs currently involve some daily contact with customers, and a comparable percentage are in the clerical, sales, and service categories.

Basic Cognitive Skills.  Most jobs that employers are currently trying to fill, even when they do not require college degrees or other evidence of skill, involve the need to perform elementary arithmetic calculations, read (or even write) paragraph-length material, and/or use a computer on a daily basis. Each of these tasks is performed daily in 50 to 70 percent of all recently filled noncollege jobs. Indeed, only about 10 to 15 percent of all newly filled jobs require none of these tasks. Employers seek evidence of ability to perform these functions from whether (and where) the applicant has attained a high school diploma, from other jobs that they have performed, and even sometimes from their ability to fill out a written job application without serious misspellings. High school diplomas (or GEDs) are considered "absolutely necessary" or "strongly preferred" in about three-fourths of all noncollege jobs. Yet employers do not necessarily believe that these signals indicate much about cognitive ability, especially when the diploma has been attained at an inner-city high school.(4)  In general, employers seem to regard high school diplomas as minimally "necessary" but not "sufficient" to prove basic cognitive ability.

Job-Specific Skills.  Skills that are somewhat specific to the job in question are needed in many cases as well. These are generally measured by whether candidates have any experience or training in that particular line of work. Employers might also administer job-related tests, such as those for typing ability. Specific previous experience is necessary or strongly preferred in about 65 percent of noncollege jobs; about 40 percent also require previous training or skill certification, and tests are administered in about half.

Summary:  Demand vs. Supply of Skills among the Disadvantaged

While most of the required skills described above are fairly minimal, they may be beyond what many workers bring to the low-skilled labor market. For instance, some research reports that over 60 percent of long-term welfare recipients lack high school diplomas or GEDs.(5)  Most are concentrated in the bottom 20 to 25 percent of the U.S. distribution of test scores, and a majority of those with very limited work experience over many years are concentrated in the bottom 10 percent.(6)  Significant fractions also report disability or substance abuse problems. Indeed, it is frequently estimated that 30 percent or more of current or recent welfare recipients may not meet the most basic job readiness or skill requirements for employment.(7)  Among unskilled and African American young males in particular, skill problems are compounded by the pervasiveness of criminal records. For instance, at least a third of all young black men between the ages of 16 and 34 have some type of criminal record; and this fraction rises to over 60 percent among young black men who are high school dropouts.(8)

Of course, a small number of jobs with minimal or no skill requirements (beyond those of job readiness) might be sufficient to absorb the relatively small number of workers who lack those skills, but there remains considerable uncertainty about whether this is true. Some recent evidence(9) suggests that there may not be enough of these jobs in the short-run for all those who might want or need them, particularly when labor markets are not as tight as they are currently.

Also, more jobs can be created over the longer term in response to increases in labor supply, but these will require even further declines in wages among very unskilled workers. And, to the extent that such jobs are available to workers who want them, the problems of high turnover and very low wages/benefits will almost certainly plague these employees.(10)