The Low-Wage Labor Market: Challenges and Opportunities for Economic Self-Sufficiency. Mismatch in the Low-Wage Labor Market: Job Search Perspective . Lessons Learned: Is There a Mismatch?


The answer to the question of whether there is a mismatch between the search strategies of workers and employers is not a straightforward one. If the question is to be interpreted solely in terms of whether there is an overall match between the types of search methods employed, there is very little compelling evidence that the methods of job seekers are discordant with those of employers. Only in the case of direct application — a method favored by many more job seekers than employers — is there evidence of a significant mismatch by search strategy. And even here, the impact of the mismatch may be limited, given that most job seekers rely on multiple methods of job search. Concerning the other methods examined, both employers and job seekers rely on advertisements with limited to moderate success, neither rely predominately on formal intermediaries, and both employers and job seekers clearly recognize the value of informal referrals to the job-matching process. Social network relationships are exploited both on the demand and the supply side, and account for a significant number of hires in a variety of industries, especially for less-skilled occupations. Thus, there does not appear to be a glaring mismatch between the search strategies of workers and the recruitment methods of employers in the low-wage labor market.

However, the finding that both job seekers and employers recognize the value of informal ties and use them to find and fill positions does not lead to the conclusion that the process works to the same end for all job seekers. As was suggested above, not all job seekers are part of effective job networks. The job information gained through informal referrals may be more or less credible depending on the characteristics and status of the individual providing the information and his or her connection to the labor market. Moreover, employers may base their judgments regarding the quality of a referral on their views of the referring party rather than on the actual qualifications of the referred candidate. Thus, a critical examination of the process of finding work and workers, respectively, suggests that the job-matching process is complicated by forces that shape not only the types of search methods used, but the manner in which they are used as well. Attending to these factors results in a less affirmative answer to the mismatch question.

Of course, employers are not all looking for the same types of workers, nor is an informal search method the only strategy that results in successful job matches — leaving open the possibility that those job seekers least likely to benefit from informal referrals will successfully take advantage of other methods. There is some evidence that this does occur. For example, African American workers in public-sector employment are more likely to have been hired through a formal employment agency than through one of the other methods of job search.(57)  However, recent job growth has been concentrated in industries like service and retail that especially favor informal recruitment methods, which may operate to the disadvantage of African American job seekers.

Moreover, employers who rely on other methods such as advertisements and direct applications appear to employ screening criteria that may effectively eliminate the very same job candidates negatively affected by the informal referral process. In particular, like employers who utilize informal referrals, employers who rely on direct applications and advertisements may also search for candidates who possess hard-to-measure "soft skills," and rely on subjective measures to infer a candidate's qualifications as a result. In fact, some employer studies suggest that employers act on information based on group-specific beliefs — or stereotypes — in the screening process of the applicants who come to their attention via advertisements or direct application. Such an argument has been used to explain African Americans' relative disadvantage in obtaining jobs through advertisements and direct applications (where race may be used as a proxy for worker qualifications in the screening process) and their relative success in public employment where more formalistic and less personal screening criteria are used.(58)

One might also caution too rosy an interpretation of the job-matching process for those individuals who appear to be on the winning side of this equation (i.e., groups that have strong footholds in industries because of effective job networks). As was suggested earlier, closely knit ethnically segregated "niches" function not only to exclude some from getting hired, but also to segregate those hired into low-quality jobs in firms with limited future rewards. Such a closed, informal system may take advantage of workers who have lower expectations about workplace conditions or who may be less able or willing to take recourse against negative working conditions. Such a characterization seems most compelling for firms that rely heavily on immigrant labor.