The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Mismatch in the Low-Wage Labor Market: Job Search Perspective . The Effectiveness of Other Search Strategies

02/16/2000

  • Compared to informal referrals, reliance on direct applications is a less-effective method of job search. A direct application is more likely to be successful for white applicants, and in retail, sales, and service occupations and large, public-sector firms.

Analyses of the Current Population Survey (CPS) data suggest that unsolicited direct applications represent the most common method of job search among the unemployed, and the use of direct applications tends to increase during periods of high unemployment.(18)  However, despite their greater use, direct applications are less likely than informal referrals to successfully lead to a job offer or hire. Both studies of workers(19) and studies of employers(20) suggest that somewhere between 10 to 25 percent of jobs in the low-wage labor market are actually filled by unsolicited applications. African Americans are less likely than whites to receive offers as the result of a direct application, and the black-white gap in offer rates has been found to be higher for direct applications than for any other search method.(21)

Whereas direct applications do not appear to be the primary search method in any industrial or occupational sector, their use is apparently more common among employers in retail sales and service.(22)  Direct applications are also used more often by large firms than small firms(23) and by the public sector as opposed to the private sector.(24)  Importantly, African Americans who rely on direct applications in their job searches continue to be at a disadvantage relative to white direct applicants even in sectors with proportionately higher black employment (i.e., the public sector).

 

  • Advertisements account for about as many hires as direct applications and, like direct applications, seem to function to the disadvantage of nonwhite applicants. Advertisements are more commonly used by suburban employers and to hire clerical and entry-level managerial and professional workers in the private sector.

Most studies suggest that, although employers have increased their use of advertisements in the last 20 years,(25) fewer than 10 percent of jobs obtained by less-educated workers are the result of successful responses to media advertisements.(26)  Employer studies suggest the number is somewhat higher, accounting for about 25 percent of less-skilled hires.(27)  Although the racial gap does not appear as large as for direct applications, research findings suggest that African Americans who rely on advertisements are still significantly less likely than their white counterparts to receive offers.(28)  Advertisements seem to be used more often by private- rather than public-sector employers,(29) and by suburban firms and firms seeking clerical and entry-level managerial and professional workers.(30)

Data are less consistently collected on the use and effectiveness of help-wanted signs; however, there is little evidence that this method is particularly desirable or effective — either for employers or job seekers.(31)  Qualitative evidence suggests that central-city employers, in particular, are skeptical of posting help-wanted signs for fear that doing so would attract a flood of "undesirable" applications from local residents, which could be avoided through more targeted strategies such as informal referrals.(32)

 

  • Formal organizations are generally the least preferred method of job search by both job seekers and employers, and public and private agencies together account for 10 percent or less of less-skilled hires. Although search via formal organizations accounts for a minority of job matches, it is a relatively more successful strategy for African Americans when compared to their success using other methods. Formal organizations are disproportionately used by large, bureaucratic firms with substantial hiring needs.

Data from several firm-level employer studies are remarkably consistent concerning the low percentage of hires obtained through public or private agencies.(33)  These studies suggest that public employment agencies, which tend to be used disproportionately by unemployed and African American job seekers, account for less than 4 percent of less-skilled hires.(34)  Private employment agencies have been found to account for a slightly higher percentage of less-skilled hires, and are disproportionately utilized to fill clerical positions. Overall, employment agencies (public or private) are used more frequently by larger, more bureaucratized firms with formalized personnel offices and especially by financial institutions.(35)

Although the use of formal agencies for job searches is relatively rare across industrial sectors, there is some evidence that when such a search method is used by an employer, African Americans benefit.(36)  The formalized and less-subjective screening process that occurs in employment agencies as compared to the other methods undoubtedly lessens the influence of negative beliefs based on group-level stereotypes, resulting in a fairer evaluation of job candidates. The problem, of course, is that these same formalized procedures are looked on unfavorably by many employers, who in fact prefer to have the opportunity to exercise more subjective decisionmaking. Thus, whereas formal organizations may hold benefits for African American job seekers, the promise of these organizations remains limited because most employers prefer other hiring methods.