You Weren’t Being Paranoid: The Longer You Are Unemployed, The Less Eager Employers Are To Hire You

Journalist Arthur Delaney has written several excellent articles about the plight of the unemployed for the Huffington Post. His September 28th article, “Unemployment Study Offers More Evidence Nobody Wants To Hire The Long-Term Jobless,” confirms what job seekers already suspected: the longer you stay unemployed, the less likely it is that your résumé will attract any attention from prospective employers. In fact, the résumés which were most attractive to potential employers were those belonging to people who claimed to already be employed. In short, your hypothetical future boss would prefer to steal you from your hypothetical current boss rather than to hire someone who is actively hunting for work, especially if he or she appears to have been looking for an extended period of time.

Researchers Kory Kroft, Matthew J. Notowidigdo and Fabian Lange sent out 12,000 fake résumés to real jobs posted online; these jobs were for employment opportunities being advertised in 100 U.S. cities nationwide. They outline the results of their study in a working paper for the National Bureau of Economic Research:

This paper studies the role of employer behavior in generating “negative duration dependence” — the adverse effect of a longer unemployment spell — by sending fictitious résumés to real job postings in 100 U.S. cities. Our results indicate that the likelihood of receiving a callback for an interview significantly decreases with the length of a worker’s unemployment spell, with the majority of this decline occurring during the first eight months.

We explore how this effect varies with local labor market conditions, and find that duration dependence is stronger when the labor market is tighter. We develop a theoretical framework that shows how the sign of this interaction effect can be used to discern among leading models of duration dependence based on employer screening, employer ranking, and human capital depreciation.

Our results suggest that employer screening plays an important role in generating duration dependence; employers use the unemployment spell length as a signal of unobserved productivity and recognize that this signal is less informative in weak labor markets.

As Delaney puts it:

In each résumé [that the researchers sent out], the fake job candidate had been out of work anywhere from one month to three years. It turned out that the longer the jobless spell, the fewer the callbacks. […]

The authors noted that despite widespread interest in the notion that longer unemployment spells diminish workers’ job-finding prospects, it’s been difficult to prove because two job candidates who look similar to researchers might look different to employers. That’s how they came up with their fake resume idea.

“At eight months of unemployment, callbacks are about 45 percent lower than at one month of unemployment,” according to the study. The callback rate falls from 7 percent to 4 percent in that time.

In Delaney’s July 30th article, “Unemployed Face Discrimination Just One Month After Losing Their Jobs, Report Says,” he described some similar studies that showed, again, that potential employers are less enthusiastic about unemployed job applicants no matter how briefly they have been unemployed, and it is irrelevant whether they jumped (quit voluntarily) or were pushed (were laid off through no fault of their own).

“Although it has long been theorized that the simple fact of being unemployed carries a stigma, the idea has never really been tested outside some studies by economists who have focused on the duration issue,” said Geoffrey C. Ho, a doctoral candidate at the UCLA Anderson School of Management. Ho conducted the research with Margaret Shih and Daniel J. Walters of UCLA Anderson and Todd Lowell Pittinsky of Stony Brook University for their article, titled “The Psychological Stigma of Unemployment: When Joblessness leads to Being Jobless.”

We found bias against the jobless, among human-resource professionals as well as among the broader public, virtually from the outset of unemployment,” Ho said. More than 5 million Americans have been unemployed for six months or longer.

The three studies, nutshelled:

Study #1: The time to look for a new job is while you still have one. The team of researchers asked almost fifty Human Resources professionals to review identical résumés. Well, the résumés were almost identical. Half indicated that the job seeker was currently employed, and half indicated that the candidate had been unemployed for a month. The HR professionals rated the “currently employed” would-be employee much higher for perceived competence and hireability.

Study #2: No one cares if you were laid off or quit. The team of researchers asked a group of students to determine the desirability of various hypothetical job applicants. Half the samples indicated that the job seeker had chosen to quit their previous job, and half said that the unemployed person had been let go. The students had no greater sympathy for the unemployed people who had been let go involuntarily than for those who had chosen to leave voluntarily.

Study #3: If your former employer went under, then you will get a little bit more sympathy. The researchers found that job seekers who indicated that their previous employer had gone out of business (i.e., went bankrupt, closed a factory, et cetera) did receive more sympathy. In other words, as long as the people who were asked to review the résumé samples were given “some explicit indication” that it was not the unemployed job seeker’s fault that he or she lost his or her job, they were more positively disposed toward the job seeker.

As Delaney elaborates: “To illustrate “a psychological stigma against the unemployed,” the new research paper’s epigraph is a line from a piece Ben Stein wrote for the conservative American Spectator in 2010: “The people who have been laid off and cannot find work are generally people with poor work habits and poor personalities.“”

Delaney also outlines how the Congressional Budget Office has tracked statistics that indicate that prolonged discrimination against the unemployed has contributed to the overall jobless rate. In a February 10th, 2012 article, he says:

The stigma of long-term unemployment is so bad that it actually contributes to a higher national unemployment rate, according to an analysis by the Congressional Budget Office. As workers sit idle for months and years, their skills deteriorate and the very fact of their joblessness makes them even less employable. The CBO estimates that stigma and skill-erosion combined have boosted the unemployment rate by a quarter of a percentage point since the start of the recession in December 2007 — and that the jobless rate will be half a percentage point higher for the next several years.

“Regardless of its initial cause, unemployment in general and long-term unemployment in particular can lead to subsequent difficulties for the affected workers,” the CBO says. “One mechanism by which unemployment reduces future employment prospects is through the stigma attached to long-term unemployment — that is, an employer’s inference that people who have been unemployed for a long time are low-quality workers.” […]

Explaining the source of unemployment stigma, CBO cited hearings by the Equal Opportunity Commission that examined discrimination against the jobless. Starting in 2010, employers’ inferences that the unemployed make poor workers manifested repeatedly as job advertisements with conditions like “must be currently employed.” George Seed, an executive at a Georgia recruiting firm, explained the reasoning behind such ads last year. “When my clients hire me, they want people who are motivated to go to work for the right reasons,” he said. “And if someone is currently employed in a good position, then their motivation to move to a different company would be that the company offers better benefits or offers more growth for advancement, or whatever. They’re not people who have to have a job, they’re people who want to move for the right reasons.” […]

The CBO’s report suggests the longer a person is out of work, the greater the stigma becomes: “Long-term unemployment may thus produce a self-perpetuating cycle wherein protracted spells of unemployment heighten employers’ reluctance to hire those individuals, which in turn leads to even longer spells of joblessness.”

President Obama has spoken out about discrimination against the unemployed. Delaney explains that Obama’s American Jobs Act includes a ban on employers discriminating against unemployed job seekers: “[Obama characterizes] it as non-controversial measures designed to get Americans back to work, and he [has] repeatedly urged Congress to pass the bill “right away;” he [has] also said that the bill would not add to the national deficit and would be fully paid for”.

Predictably, Republicans have refused to support or pass the AJA, and have instead wasted time trying to repeal Obamacare and to trying to pass laws restricting women’s rights to make their own healthcare decisions without government interference, including legislation blocking uncomplicated patient access to contraception options, and legislation advocating vaginal probes, anti-choice counseling, and mandatory viewing of superfluous ultrasounds prior to abortions.

The proposed [American Jobs Act] legislation states that hiring discrimination against the jobless undermines the nation’s economic stability, squanders human capital, increases demand for unemployment insurance, imposes burdens on publicly funded health and welfare programs and depresses the government’s tax revenue. The bill would ban discriminatory language in job ads and also discrimination against the jobless itself. Affected workers could file claims with the Equal Employment Opportunity Commission. […]

The ban would nevertheless give employers tons of leeway to favor workers with relevant recent work experience. Language in the bill says it is not intended “to preclude an employer or employment agency from considering an individual’s employment history or examining the reasons underlying an individual’s status as unemployed in assessing the individual’s ability to perform the job or otherwise making employment decisions about the individual.” Practically speaking, it’s also unlikely that eliminating overt anti-unemployed job ads would prevent businesses from quietly passing over the jobless, a practice that would be difficult to prove.

Rep. Hank Johnson (D-Ga.), one of the original sponsors of legislation to ban the discrimination, hailed Obama’s proposal in a statement: “Discrimination against the unemployed — especially the long-term unemployed — in job ads and hiring practices flies in the face of what we stand for as a nation: Equal opportunity for all,” Johnson said. “I’m proud to work with President Obama to stop this injustice.”

Other Huffington post reporters have also explored the issue. In a June 4th, 2010 article (“Disturbing Job Ads: ‘The Unemployed Will Not Be Considered’“), Laura Bassett wrote:

Some companies are ignoring all unemployed applicants. In a current job posting on […] a job recruiting website for the telecommunications, aerospace/defense and engineering industries, an anonymous electronics company in Angleton, Texas, advertise[d] for a “Quality Engineer” [but] red print at the bottom of the ad says, “Client will not consider/review anyone NOT currently employed regardless of the reason.” […] “It’s our preference that they currently be employed,” [a Human Resources representative for the anonymous company] said. “We typically go after people who are happy where they are and then tell them about the opportunities here. We do get a lot of applications blindly from people who are currently unemployed — with the economy being what it is, we’ve had a lot of people contact us that don’t have the skill sets we want, so we try to minimize the amount of time we spent on that and try to rifle-shoot the folks we’re interested in.” […]

Sony Ericsson, a global phone manufacturer […] recently posted an ad for a marketing position [which] specified: “NO UNEMPLOYED CANDIDATES WILL BE CONSIDERED AT ALL.” When asked about the ad, a spokeswoman said, “This was a mistake, and once it was noticed, it was removed.” Ads asking the unemployed not to apply are easy to find. A Craigslist ad for assistant restaurant managers […] specifies, “Must be currently employed.” Another job posting for a tax manager at an unnamed “top 25 CPA firm” in New York City contains the same line in all caps.

A company’s choice to ignore unemployed applicants and recycle the current workforce ignores the effect of the recession on millions of highly qualified workers and could prolong the unemployment crisis, said Judy Conti, federal advocacy coordinator for the National Employment Law Project. “In the current economy, where millions of people have lost their jobs through absolutely no fault of their own, I find it beyond unconscionable that any employer would not consider unemployed workers for current job openings,” she said. “Not only are these employers short-sighted in their search for the best qualified workers, but they are clearly not good corporate citizens of the communities in which they work. Increasingly, politicians and policy makers are trying to blame the unemployed for their condition, and to see this shameful propaganda trickle down to hiring decisions is truly sad and despicable.” […] There is no law prohibiting discrimination against the unemployed, though advocates said the practice could be illegal if it had a “disparate impact” on minority groups.

To be frank, I am tempted to coordinate with a bunch of friends and just create a “company” and “hire” all the long-term unemployed people I know. Voilà, everyone is “currently employed!” Everyone could exchange contact info and a list of their skills and accomplishments, then vouch for everyone else when called to verify the “employment” of a job-seeker.

This “I don’t want to even look at your résumé unless you are currently someone else’s employee” mindset is nonsense, and it means that there are hard-working, qualified, talented, and capable people just rotting away — and many are probably getting abuse from their neighbors for accepting government assistance to survive — because apparently employers would rather steal some other company’s employee than even think to contact an unemployed job candidate instead.

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