Job search, 40 times a month

by John Quiggin on August 1, 2014

I got lots of very helpful responses to my recent post on the search theory of unemployment, here and at Crooked Timber. But it has occurred to me that I haven’t seen any answer to one crucial question: How many offers do unemployed workers receive and decline before taking a new job, or leaving the labour market? This is crucial, both in simple versions of search theory and in more sophisticated directed search and matching models. If workers don’t get any offers, it doesn’t matter what their reservation wage is, or what their judgement of the state of the market. Casual observation and my very limited experience, combined with my understanding of the unemployment benefit rules, is that very few unemployed workers receive and decline job offers, except perhaps for temporary work where the loss of benefits outweighs potential earnings. Presumably someone must have studied this, but my Google skills aren’t up to finding anything useful.

And, on a morbidly humorous note, it’s a sad day for conservative politicians when efforts to bash the unemployed actually cost them support. But that seems to be the case for the LNP government in Australia with their latest plans, both expanded work for the dole and the requirement for 40 job applications a month. I’ll leave it to Andrew Leigh to take out the trash on work for the dole (BTW, his new book, The Economics of Almost Everything is out now).

The 40 applications requirement has already been the subject of some amusing calculations. I want to take a slightly different tack. Suppose (to make the math simple) that the average job vacancy lasts a month. There are roughly five unemployed workers for every vacancy, so meeting the target will require an average of 200 applications per vacancy. The government will be checking for spam, so lets suppose that all (or a substantial proportion) of the applicants take some time to talk about how they would be a good fit with the employer and so on. Dealing with all these applications would be a mammoth task. One option would be to pick a short list at random. But, there’s a simpler option. In addition to the 200 required applications from unemployed people, most job vacancies will attract applications from people in jobs. A few of them may be looking for an outside offer to improve their bargaining position with their current employer (this is a big deal for academics), but most can be assumed to be serious about taking the job and in the judgement that they have a reasonable chance of getting it. So, the obvious strategy is to discard all the applications except for those from people who already have jobs. What if there aren’t any of these? Given that formal applications are going to be uninformative, employers may pick interviewees at random or may resort to the informal networks through which many jobs are filled already.

Trying to relate this back to theory, the effect of a requirement like this is to negate the benefits of improved matching that ought to arise from Internet search. By providing strong incentives to provide a convincing appearance of looking for jobs for which workers are actually poorly suited, the policy harms both employers and unemployed workers who would be well suited to a given job.

Update I found the following quote widely reproduced on the web

On average, 1,000 individuals will see a job post, 200 will begin the application process, 100 will complete the application,

75 of those 100 resumes will be screened out by the Applicant Tracking System (ATS) software the company uses,

25 resumes will be seen by the hiring manager, 4 to 6 will be invited for an interview, 1 to 3 of them will be invited back for final interview, 1 will be offered that job and 80 percent of those receiving an offer will accept it.

Data courtesy of Talent Function Group LLC

Visiting the TFG website, I couldn’t find any obvious source. The numbers sound plausible to me, and obviously to those who have cited them. But, if the final number (80 per cent acceptance) is correct, then it seems as if the search theory of unemployment is utterly baseless. Assuming independence, the proportion of searchers who reject even three offers must be minuscule (less than 1 per cent).

{ 40 comments }

1

derrida derider 08.01.14 at 3:56 am

One implication of asymmetric info driven matching models is that signalling effects really matter, and can create grossly paradoxical outcomes too. So your line about driving employers away from benefit recipients is plausible.

I vaguely remember a UK paper from around the turn of the century that modelled something like this (probably a pinko like Manning or Walker or Micklewright – doesn’t sound like Pissarides or Blundell). I’ll see if I can dig it up.

2

Edward Nevraumont 08.01.14 at 5:19 am

I think it’s further complicated by the incentives the government sets up. If you turn down an “acceptable” job offer you lose your benefits. And if you turn down any offer you have to go through significant paper work to prove the offer wasn’t “acceptable”. When my (highly employable) wife was lasted off from the struggling start up she was at she took some time to find her next role. Along the way she received an offer that made no sense. She turned it down, but was then rejected for future benefits. When she appealed the government worker told her she should have just talked with the company before the official offer, found out what the offer would have been and then just asked them but to make the offer.

Obviously the agency has no idea how salary negotiations work in the freak world…

And it securely complicates you analysis on “how many offers someone receives”. I can’t imagine my wife was the only one to be councelled to lie…

3

Moz In Oz 08.01.14 at 6:05 am

I wonder how long it will take for them to start prosecuting “job seekers” who apply to work in the offices of Liberal MP’s?

If I was on the dole that’s something I’d be doing, very seriously, every week. Write the best gosh-darn application I can for every job that any MP advertises, of course, but also send speculative letters to any MP I see in the media supporting this scam saying “I hope you might be willing to employ me…”.

4

Niall McAuley 08.01.14 at 8:09 am

Then there’s David Brent’s application filter:

“Avoid employing unlucky people – throw half of the pile of CVs in the bin without reading them.”

5

Tim Worstall 08.01.14 at 8:34 am

Re the basic search theory itself. Only a thought but:

If labour (or jobs, either way around) are becoming decreasing homogenous (or increasingly heterogenous) then we’d expect search time to be rising. Particularly here I’m thinking of the rise in licensure: some 30% of US jobs now need a licence for the worker to be able to do them, many of these requiring substantial training periods.

Of course, the internet should make job search easier and faster. But if we’ve two effects working against each other then the net effect will depend upon which predominates.

This is just the area that Pissarides et al got their Nobel in, isn’t it?

6

Brett Bellmore 08.01.14 at 10:43 am

As a data point, the last time I was unemployed, I got two job offers. Interviewed for both, and took the first that responded after the interview.

Being 4 months unemployed with a pregnant wife at the time, and all.

7

matt w 08.01.14 at 11:53 am

Nevraumont @2: Sounds like this system would give employers lots of leverage in negotiations to hold salaries down and otherwise put the employee exactly where they want — “Here’s our offer. Take it our lose your benefits.”

I’m sure this is not part of the Liberal Party’s plan!

8

Tom Slee 08.01.14 at 1:49 pm

The argument makes it sound like Internet search and galloping credentialism go together. Is there any chance the latter is in part a consequence of the former?

As a side note, Anita Elberse’s excellent “Blockbusters” shows pretty comprehensively how the Internet’s search benefits that were supposed to democratize culture are perfectly compatible with the continuing success of Blockbuster strategies in the cultural and entertainment industries.

9

MPAVictoria 08.01.14 at 2:11 pm

@matt w

That is pure evil. God damn right wingers are the fucking worst people in the world.

10

Michael Sullivan 08.01.14 at 2:19 pm

From what I’ve seen on the hiring end in he US, especially at times of high unemployment, but even at times of relatively full employment — my bin was always loaded with people who went straight to the circular file as being obviously unqualified.

I’m not sure this policy will necessarily have all that much effect. There is already a lot of pressure to filter out people who have been unemployed, especially those who have been unemployed for more than a month or two. Which means there is a lot of pressure on the unemployed to apply for many jobs, because they need to hit the relatively rare employer who *doesn’t* immediately filter them, just to get a real look.

I wonder how much difference the policy will have in this environment.

I did notice that I got a few people applying to jobs with *zero* relevant qualifications, skills or even desires, who mostly just wanted me to sign a paper saying they had applied for something. So there’s obviously some kind of similar restriction in the US (or Connecticut) unemployment program.

11

Ed 08.01.14 at 2:59 pm

The description of how the job market would work in Australia if the Liberal policies went into effect is striking similar to how the job market actually works now in the US, where something like the Liberal polices are already in effect in most states.

12

Ed 08.01.14 at 3:04 pm

Anecdotally, I have been job hunting without permanent employment during two periods of my life, and often looked for a job while employed.

I basically almost never actually get offered a salaried job. In what must have been years of looking, five job offers, one of which was turned down because another offer had come in two days earlier, and four were accepted. Of the four acceptances, in one case I would have been much better off turning down the job offer, and arguably this is true in another case. But I needed a job, and as I pointed out actual job offers are rare.

So I find academic theories that depend on unemployed people receiving and turning down lots of job offers after some period of negotiation to be baffling.

13

cs 08.01.14 at 3:06 pm

Maybe placement agencies and temp agencies have some statistics on how often their workers turn down offers. But in general I would say that unemployed people who are applying for specific jobs filter out the jobs they don’t want before they apply for them.

14

Barry 08.01.14 at 3:59 pm

“So I find academic theories that depend on unemployed people receiving and turning down lots of job offers after some period of negotiation to be baffling.”

(a) Tenured econ professors, who *have* jobs, and are in a position to actually weigh and turn down offers.

(b) Right-wing intellectual pr*stitutes, who put out that story.

(note that (a) and (b) overlap)

15

Olle J. 08.01.14 at 4:06 pm

I would guess that such application requirements (40 times a month et cetera) are usually suggested and implemented by policy makers and government bureaucracies at a time when they are needed the least and are potentially harmful. When unemployment is relatively low there might actually be a positive effect of such requirements. There is bound to be at least a couple of job-seekers on the dole that are either to dumb or lazy (to use derogatory terms) to apply for jobs at a time with more unfilled vacancies with lower requirements than usual. A small push and they might actually end up with a job after.

But what’s the point of trying to be though on the unemployed when they are not that many of them around? No, the stick you save for the unfortunate bastards that comes around when unemployment is on the rise and vacancies are few; older men and women without an higher education that has not been without a job for twenty years and has a strong work ethic.

16

rea 08.01.14 at 6:00 pm

If you are applying for 40 jobs a month, then most of your applications aren’t serious.
Hell, they might as well require people seeking benefits to copy out the Encyclopedia Britannica longhand . . .

17

Donald A. Coffin 08.01.14 at 9:01 pm

My memory of some of the early empirical job search papers is that somewhere around 90% of searchers accepted the first offer. (In my own personal job searches, which have, I am thrilled to say–I’m retired–I was in the market 7 times and accepted the first offer 5 times (one failed search). Yes, I know anecdote is not data.)

This paper (http://www.jstor.org/discover/10.2307/2524590?uid=3739664&uid=2&uid=4&uid=3739256&sid=21104548182983) finds that “…many searchers…rejected at least one offer before accepting a job…” (From the abstract.)

(I did a google scholar search on “empirical job search papers” and it returned “about 1,520,000 results.” Enjoy spending the rest of your life on this.)

18

lathrop 08.01.14 at 9:54 pm

Not to put too fine a point on it, but I have a lot of tenured acquaintances in my circles, and there’s plenty of reason to think that few really understand the insecurity (and its consequences) of professional employment in non-tenured corporate jobs. They may think they understand the concepts of precarious capital financing, personal and bureaucratic politics, loss of demand, higher-ups being unlucky or unsuccessful at contract competition, strategic (or fluky) changes in priorities, speculative or arbitrary changes in investment, creative destruction in competition, etc., not to mention one not being very productive with consequences. Tenure provides a certain isolation.

19

Moz In Oz 08.02.14 at 1:01 am

lathrop: and combine that with career politicians who can only be fired for gross violation of the law or losing an election in their safe seat, and you have a pool of people who are very well insulated from any possibility of unemployment, even second hand – their kids will be found jobs even if (perhaps especially if) they’re lazy good-for-nothings.

You’ll note that in New Zealand they’ve just fired John Banks. Former Minister of Police, joined a law’n’order party and notoriously hard on ne’er-do-well’s of any stripe… convicted of fraud. Specifically, electoral fraud. What a great example he sets for the rest of us, no?

Which does make me wonder just what this will do for people with criminal convictions, especially those just released from jail. They’re the people most likely to have no social resources and no savings. So we dump them into the community, give them less than the amount required to live in poverty, and say “don’t commit any more crimes”. Yeah, right (as the Tui beer ads say).

20

John Quiggin 08.02.14 at 1:53 am

Great news about Banks. ACT is a particularly loathsome party, combining the market-Leninists who wrecked the NZ economy with the worst kind of racially coded Laura Norder politics. They’ve held on to representation in Parliament for many years thanks to quirks in the rules and despite miserable electoral performances.

21

Moz In Oz 08.02.14 at 2:28 am

ProfQ: they have given up the coding part…. their current leader (Jamie Whyte) has just released a document explaining that Maori are as privileged now as the French aristocracy were just before the revolution. There have been a lot of “Whyte Power!” headlines.

Banks is promising to appeal claiming definitive new evidence (presumably that also contradicts his previous “everyone does it” defense to the media).

22

Thornton Hall 08.02.14 at 2:30 am

After being a chronically under employed lawyer working on temporary document review projects for three years, I switched tacks and applied to be a property manager. Considering the entire 3 years, hundreds of resumes/applications, and finally my recent new job, I can tell you my answer: zero. I turned down zero job offers.

23

John Quiggin 08.02.14 at 3:26 am

@22 I’m glad to hear you have found a job, at any rate.

24

John Quiggin 08.02.14 at 3:33 am

@18 Tenure in the sense you describe is long gone in Australia. Legally, the kind of academics we would call “tenured” are continuing employees, with essentially the same job protections as others in the same category (plus, a sharply contested notion of “academic freedom” which essentially says you can use your job title to say controversial things and not get fired – private political opinion is protected for all, unlike the US). Universities can and do fire academics en masse, or on the basis of rank-and-yank exercises.

Having said all that, a continuing academic position is safer than most, except for the CEO-level positions where even if they fire you they still have to pay you a fortune to go away.

25

Fraud Guy 08.02.14 at 4:28 am

Anecdote is not data.

My wife is currently searching, and has applied for about 300 jobs since released 10 months ago. Unfortunately, due to her job level and field, about half of those applications have been for 3 large hospital chains in the area, some for the same repeatedly posted position. Another quarter have been for 4 temp agencies, some of them hiring for the same hospitals. Another 10% have been for medical practices, most of who route through those same hospitals as they are bought up.

And no offers.

26

guthrie 08.02.14 at 12:19 pm

IN the UK, the system (with which I am familiar, being a long term unemployed person), requires that you make a certain number of job applications a week, or else they’ll get nasty. So that’s perhaps a million unnecessary extra job applications a week to be filed in the delete folder of the email you sent it to, and hundreds of thousands of hours wasted filling them in. I have often wondered what effect it has on the work pattern of HR folk.
It’s certainly no use at all for finding work, although they will always wheel out stories about someone who applied to 100 jobs a week until they got one, or someone who thought “i’ll never get that job, but I’ll apply anyway” and who ended up with the job.

Moreover, you are expected to take up any offer you receive; you might be able to persuade them that you can’t afford the commute money or time or something like that, but that’s pretty rare.

The UK jobs market is in a bad way though. Millions of full time jobs have been replaced by millions of part time, temporary and self employed positions leading to a worsening of the work life of normal folk:
http://flipchartfairytales.wordpress.com/2014/07/29/the-british-economys-long-bath/

Of course the facts on the ground don’t stop politicians and the media bashing unemployed people.

27

Moz In Oz 08.03.14 at 3:42 am

Guthrie, it’s pretty bad. I work in IT and between the overseas “I require sponsorship (and have no relevant skills)” applicants for whom a sponsored job is effectively winning the lottery, and the forced applicants (often no skills at all), we typically got more than 200 applications for any programming job and perhaps 2 that were worth looking at.

Part of it is the huge number of kids with computer science or software-related degrees who are working in help desk or retail and are desperate to program, but I’m happy to dig through 30 of those for the one of them who seems to have done something to advance their skills in the two years since they graduated. It’s the 180 other applications from people trying very hard to dress up whatever they have to match our requirements that get me down. I actually have to read them and decide whether they’re worth having someone else look at, because finding the exact skills we need is unlikely so we’re always looking for “could we get by with this person” or “could this person learn”, and when we’re hiring entry-level geeks “can they learn” covers an awful lot of territory.

On that note, Centrelink has no way to ensure applicants are contactable or reply to our questions. All we can do is ring Centrelink and try to complain… and there is no way I’m going through the Centrelink phone system to punish a dole bludger, that’s a waste of my time.

28

Thornton Hall 08.03.14 at 4:17 am

@23 thanks. I should have been doing hands on problem solving a long time ago. I love the humanities, but really don’t like writing more than 800 words at a time, and absolutely dread negotiating. My intellectual path and my vocational path diverged in a forest and I took the path that was was marked.

29

Barry 08.03.14 at 3:38 pm

Fraud Guy 08.02.14 at 4:28 am
“Anecdote is not data.”

Was this addressed to somebody in particular, or did you just realize this, and wanted to make sure that the rest of the world heard about this brand new idea?

30

Metatone 08.03.14 at 8:33 pm

@21 Moz in Oz – I always knew Jamie Whyte was a shady character, ever since I read his “Bad Thoughts” book, which seemed terribly tilted towards Whyte’s prejudices in the face of evidence… still, he’s fallen much further than I could ever have imagined.

@JR
There’s something bizarre about the “turn down” literature, and it’s not just that (as others have pointed out) that many of the researchers are unable to take into account the realities of both unemployment and the labour market.

Rather, what could be considered odd is that if you believed in the qualities of the “free market” you’d be happy to see “offers turned down” because what could be more inefficient than someone taking an unsuitable job? Imagine the waste… Surely the seeker is more informed about their suitability than some bureaucrat – or even a HR person who has never met them?

31

Thornton Hall 08.03.14 at 9:22 pm

@29 I suspect it was an attempt to anticipate the complaints of people like you and diffuse them. But it’s a classic can’t live with ‘em, can’t shoot ‘em situation.

32

derrida derider 08.04.14 at 4:54 am

@30, on that topic have a read of Acemoglu’s well known paper (it started a chain of papers actually) on how it is more efficient from society’s view to have people be “job snobs” by only looking for good jobs, even where it might be better for the individual to take anything. See http://www.jstor.org/stable/10.1086/209978

33

Meredith 08.04.14 at 6:26 am

A lot of weirdness in the comments here, from my perspective. My very talented and highly educated friend has been applying with gusto but care for jobs for over 6 months (not just applying — all the coffee meetings and such that go with it). I don’t know what his competition is, but if someone of his caliber can’t find a job in his field, it has everything to do with a-hole government policies. Are other countries as dysfunctional as the US at the moment? I would hope not. (Btw, he has $100,000 educational debt — and the rates of those so-called education loans– you don’t want to think about it. Talk about dysfunction.)

34

Moz In Oz 08.04.14 at 8:48 am

Meredith: see my comments about being on the other end of the process – standing out from the 100’s of plausible but wrong CVs can be hard.

I’ve been in the “desperate for a job” position, interestingly at the same time as finding myself in a city full of poor employers. I think once employers establish in their minds that a given skillset within an industry is worth $X, that sticks despite evidence to the contrary. As well, but I have found that some segments of my industry seem to pride themselves on being poor employers. They compete to offer the lowest wages, complain about high turnover and low productivity, and often have awful recruitment processes to go with their awful management. I’ve had everything from “we don’t smoke inside, we smoke on this tiny balcony off the open plan office” (at the mild end) to “ah yes, the senior software engineer position, your group interview is in room 3, here’s a copy of the basic computer literacy test you need to complete before the interview”… which I suppose at least explained why they were offering barely above graduate wages for the position (they were recruiting recent graduates willing to claim the “senior” title).

My best ever job experience: I was desperate so I took a job at ~30% below my expectations thinking that I could talk the rate up over time. A few months later my team leader asked if I knew anyone who might be interested in working for us. I said “to keep someone at my skill level you’d need to pay at least {my expected rate}”. “not going to happen”, he says. A month or so later when I said I had a job at that rate and was not interested in negotiating with him he was shocked! Management was not one of his skills.

35

Olle J. 08.04.14 at 11:03 am

Labour markets and recruitment practices are hard to analyse as they usually vary between different countries and between different industries as well as changes over time. Even jobs that one would think are similar are filled in completely different ways. In one setting the job could be filled because someone at the work place that knows someone and the guy or gay gets hired after a cup of coffee over at the local diner. In another setting its done through the help of an external recruitment firm that uses several steps and screening technique as well as conducts several interviews even before the potential employer gets involved in the process. Either way, I would say that in most cases they could be described as dysfunctional.

36

Trader Joe 08.04.14 at 11:45 am

In my experience turndowns are pretty rare. The 20% rate cited in the OP is plausible among the newly unemployed but declines every month someone remains out of work.

When it happen, its usually someone recently released that is highly qualified/employable who has put out their initial scattershot of applications, is getting lots of nibbles and ultimately ends up with (or thinks they will end up with) more than one offer… a person unemployed for longer than about 30 days or certainly 60 almost never results in a turndown.

37

reason 08.04.14 at 1:11 pm

I hate to point this out, but if there was a basic income this discussion would all be moot. The problem is that society is objecting to paying people not to work when they refuse to take jobs. This is perhaps understandable. But if it was paying them regardless, then in the end it would prefer that they take the job to which are best suited.

38

Svensker 08.04.14 at 1:28 pm

More anecdotes:

3 of our good friends have been job seeking for over a year.

1 finally found a full-time job Before that he turned down a temp job that required him to travel 4 hours to another part of the state, payed just over minimum wage, and did not reimburse travel time or costs. They did offer to pay for his hotel when he arrived.

1 has not found a full-time job but is working 3 part-time jobs, turned down nothing.

1 has found a small part-time job, turned down 1 temp job that required her to commute for 1.5 hours for a minimum wage job lasting 1 week. She also turned down a minimum wage job in a sandwich shop because it required weekend work and she is taking a weekend accreditation course which she hopes will boost her decent employment chances (she already has a B.A. from a fairly “prestige” school).

So, you could say that 2/3 technically “turned down a job.”

You could also say the job market still sucks sour owl balls. Although not so badly as a few years ago.

39

guthrie 08.04.14 at 1:52 pm

Meredith – other countries are as disfunctional as the USA. The jobs markets are fragmented and extremely messy. A friend of mine returned from a post-doc abroad, took nearly 2 years to find a job. In Denmark. I.e. there was no work for him in the UK, not only because obviously by the time you have a PhD (In chemistry/ physical science related to solar cell stuff, so you’d think that might be useful) there aren’t many jobs that will fit you, but because of the usual issues with being overqualified, or agencies or HR departments that work just by keywords and know nothing about the specific job. Or the company that re-advertised a job twice over a 6 month period; 3 adverts because they simply couldn’t find the right person for their rigid and narrow minded job spec.

40

Corey Mutter 08.04.14 at 2:19 pm

I think the problem lies in treating the job market as a “market” in the first place. It’s so dysfunctional that it barely even approximates a market:

In a lot of industries (programming is an example) wages are treated like nuclear launch codes; so much for informed consumers.

See the employers who complain about persistent inability to find qualified candidates. Even if we assume they’re sincere (any many likely are), the obvious market solutions of increasing wages and/or training people never seem to happen.

And (in the US private sector at least) there are literally no legal barriers to firing people, yet employers are extremely picky. The usual explanation is fear of frivolous lawsuits (despite ~100% penetration of binding-arbitration pre-employment agreements), but that can’t be a big enough effect to explain it – unless I haven’t noticed that employment-lawsuit settlements are 5% of GDP, supposedly-rational employers are leaving a lot of money on the table.

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