Research Findings

Segmenting the online job market: Avoiding black holes and recruiting purple squirrels

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August 14, 2019

Many view the Internet as the ultimate labor market tool. By massively expanding information about job openings (through job posting sites like Monster.com) and job seekers (through social media sites like LinkedIn), the internet has reduced the information boundedness problem that plagued earlier labor markets.

But greater exposure to information on both sides of the labor market is insufficient for an expanded opportunity. In fact, it could lead to greater segmentation of the workforce.

To learn more about how the internet has transformed the market for labor, we interviewed 61 HR professionals in two southern metro areas in the US. We asked them to explain how they used the internet for posting jobs, recruiting workers, and reviewing job applicants. The results revealed two very different ways in which organizational actors perceive the online labor market.

The black hole of mass posting sites

HR professionals advertise low pay, low skill, and generalist jobs on mass posting websites like Monster and Indeed. Because of their broad audiences, these sites tend to generate very large applicant pools. However, many applications come from individuals whom employers deem to be completely unqualified. This creates a lot of extra work for HR staff who must, in their words, “weed out the junk.”

Mass posting boards are described as the “black hole” of the job market. With so many applying for positions, it is very difficult for anyone to obtain a job this way. As one of our subjects described it:

People will post jobs and there will be hundreds of applicants and no one will hear back, so it’s that feeling of inadequacy. People are feeling, ‘nobody wants me.’

Applying for jobs on the black hole market is a frustrating exercise for job seekers. We attended support groups for unemployed HR professionals to find out more about their experiences looking for work. These “in transition” HR workers confirmed for us the problems associated with searching for jobs via mass posting sites: “I have no faith that I will get a job because I’ve applied for something electronically.”

Because this market is highly competitive, de-personalized, and unproductive, its use is demoralizing for job seekers.

Recruiting purple squirrels

HR professionals describe their use of the internet to recruit workers for high-wage professional and managerial positions quite differently. They speak of the challenges they face in finding “passive” candidates who are not looking for new jobs, as well as candidates with very specialized experiences and skills (“purple squirrels”).

Pursuit of passive candidates is motivated by the view that active job-searchers may be trouble-makers, job-hoppers, or desperate to find employment. People who are not looking for work are seen as the least risky hires. As one of our respondents explained:

It’s kind of like dating. You want the girl that’s not available. There’s a reason she’s not available.

HR professionals find passive candidates through intensive use of the sophisticated search tools on LinkedIn and by perusing the organizational websites of their competitors. They engage in a set of personalized strategies for contacting passive candidates and encouraging them to apply for new positions.

“Purple squirrels” represent a specific class of desired candidates – those who meet combinations of skill and experience requirements so specific as to make them literally unique. HR professionals explained that hiring managers’ applicant criteria have changed over time: “The increased use of online tools has grown the pool of candidates to the point where managers definitely feel like they can find the perfect fit.” In other words, larger candidate pools have led to a ratcheting up of skill expectations for job openings.

While employers do engage in some middle ground practices, their narratives were dominated by reference to the distinction between the black hole and purple squirrel markets.

Brave new online world

Our findings suggest that increased access to information may not result in more efficient matching of workers and jobs. Rather, exposure to greater online information has helped to bifurcate the job market.

Increased information about low-wage jobs in the black hole market promotes greater competition among unemployed workers, active job seekers, and workers in lesser skilled occupations. Increased information about potential applicants has also expanded the passive market in which employers poach candidates from competitors and avoid those who are actively looking for jobs. These processes result in “winner-take-all” outcomes for elite labor market participants.

Our study has several important implications. First, access to information has, unfortunately, not translated into improved employment opportunities for workers at the bottom end of the labor market. This is important to consider as federal and state legislatures debate the idea of expanding work requirements for receiving Medicaid, SNAP, and other forms of government assistance. If successful, these provisions would only serve to push workers into the highly competitive and often futile black hole market.

Second, our study reveals a unique form of labor market segmentation in which workers’ digital signals are crucial for understanding social stratification. Organizational actors are playing an active role in fostering these divisions.

Despite allusions to a “skills gap” between employer demand and labor supply, employers are avoiding hiring qualified candidates. This avoidance is partly due to an over-reliance on stigma assigned to unemployed workers as well as those who are actively looking for work. Qualified candidates are also overlooked thanks to a process of skill ratcheting, whereby job requirements may not change, but increased access to information about the labor pool raises employers’ expectations for the skills that workers bring to the organization

Read More

Steve McDonald, Amanda Damarin, Jenelle Lawhorne, and Annika Wilcox, “Black Holes and Purple Squirrels: A Tale of Two Online Labor Markets,” Research in the Sociology of Work 2019.

Image: Clker-Free-Vector-Images via pixabay

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