Labor Research Uncovers the Why Behind Employers’ Reluctance to Hire Long-Term Unemployed

The latest (July 2017) research by The I Z A Institute of Labor Economics reaffirms something we’ve known for some time now – from past labor and employment research and (possibly) experience: the longer you’re unemployed, the harder it is to find a job. But, it also goes one step further, providing insight into the thought patterns of those in hiring positions.

The lab experiment study, conducted by Eva Van Belle, Doctoral Researcher at Ghent University and other researchers from Ghent University (Professor Stijn Baert), KU Leuven (Professor Ralf Caers), Vrije Universiteit Brussel (Lecturer Marijke De Couck), and the University of Oxford (Postdoctoral Researcher Valentina Di Stasio), evaluated the length of unemployment – using fictitious job candidates (differing in gender, educational attainment, work experience, and social activities) and participating HR professionals – on one’s chances of being hired. The participants, for the experiment, not only made hiring decisions, but also rated these qualified candidates based on their perceived characteristics: general signaling theory (lower motivation, intellectual and social capabilities), skill loss (or depreciation), queuing theory (lower trainability), and rational herding (based on the belief: if unemployed job applicants were productive, they would’ve been hired).

The study’s results uncover the ongoing issue of hiring discrimination against the unemployed. Job candidates with shorter unemployment spells, for instance, have higher probabilities of receiving job offers than those with longer unemployment spells. Rand Ghayad, Ph.D., Labor Economist, presented similar findings in his job market paper, The Jobless Trap: “. . . job seekers with long nonemployment spells received far less interview requests on average than inexperienced short term jobless workers– even when they applied to jobs at similar type of firms.” Economists label this the negative duration dependence.

This study’s findings, however, also reveal useful information on why employers are reluctant to hire those who are among the ranks of the long-term unemployed. It centers on perceived characteristics. Specifically, the researchers’ findings indicate: “. . . that employers’ reluctance to hire long-term unemployed is to a large extent mediated by their perception of unemployment as signalling lower intellectual and social capabilities and, in particular, lower motivation.”

Two additional perceptions affected hiring decisions in the experiment:

“. . . a smaller fraction of the total effect of unemployment duration on hiring intentions turned out to be associated with rational herding, that is, the belief that other employers found the candidate’s productivity to be low. An even smaller (and, depending on the specification, sometimes insignificant) mediating role was found for the two alternative mechanisms: perceived skill loss and queuing based on perceived trainability.”

Though the study’s participants knew they were taking part in the data collection experiment for research purposes, I’d say the identified judgments and rankings closely resemble those playing out in real-life hiring deliberations across the world. It’s – indeed – a disturbing pattern in the recruitment and selection process.

We’re well aware of this fact: employers judge job applicants, when deciding who to interview and hire. When the applicants have been looking for a job for a long time, though, they make erroneous assumptions about one’s character, based on the information they receive via one’s resume, for example, and become reluctant to hire. “. . . Recruiters perceive long-term unemployment,” says Eva Van Belle in I Z A’s Press Release article, Long-Term Unemployed Through the Eyes of Recruiters: Less Motivated, Less Talented and Less Trainable“as a signal of lower motivation. This turns out to be the most important explanation for the fact that the long-term unemployed job candidates are immediately rejected.”

Thing is, why assume character, personal, and social flaws, when evaluating the job application materials of people who have been out of work for a while, especially when high numbers of people are experiencing unemployment? To decide against interviewing and/or hiring job applicants, because you feel they’re not productive, motivated, or skilled, without proof, is problematic.

I’ve said this several times, here on Serenity Amidst Frustration, but it’s worth repeating: while there might be some people, without productivity and motivation, amongst this group, these characteristics don’t apply to everybody. Many truly desire employment and productively continue to look for jobs, build their skills, learn new skills, stay up-to-date on industry trends and technologies, and/or explore new industries.

Yet, perceptions are influencing the behavior of many HR professionals. The result as presented by the study? Lack of employment interviews and job offers for competent people with abilities to solve business pains.

This is a serious issue. These negative perceptions are keeping many people out of the jobs they desire to earn money. Hiring systems need change. Hiring professionals should challenge their beliefs. Regina Hartley’s: The Best Hire Might Not Have The Perfect Resume, in fact, is a valuable resource on looking past the resume.

No federal law protects those unemployed, though we know this hiring practice is wrong. In a few states, though, it’s illegal to discriminate against the unemployed in hiring processes.

Interested in reading more about the study? Following is a link to the published Discussion Paper (PDF): Why Is Unemployment Duration a Sorting Criterion in Hiring?