A graph on income that I put together. Discussion to follow. Please note that figures are estimates and need to be fine-tuned.
10.06.2008
Employment and Social Networks of Low-Wage Workers
I've become increasingly interested in the role that social networks play in low-wage workers' job searches. Specifically, are some groups, say recent immigrants, more likely to recognize and leverage their social networks than their American-born counterparts? Are certain demographics more accustomed to developing and using social networks to obtain employment? Are social networks utilized for education, training, and career development, or merely to get into any available job?
I was excited to recently come across a 2005 paper entitled “Getting Connected: Strategies for Expanding the Employment Networks of Low-Income People”, written by Shayne Spaulding and published by Public/Private Ventures.[1] This was a great primer on the importance of social networks to low-income job seekers. Spaulding cites research indicating that more than two-thirds of low-income job seekers find jobs through personal connections, compared to 40-50% of all job-seekers. Another study he cites reports that 88% of hiring managers for low-skilled positions rely on internal referrals from employees already working with them and that 64% use this as their primary recruitment method.
Spaulding then goes on to describe the challenges to effective utilization of social networks by low-wage workers. Among these challenges are; the small size of many job seekers’ networks; a reluctance to let peers or acquaintances know that they are looking for work; the homogeneity of employment situations among social networks (many unemployed or low-wage earners have social networks that include only other unemployed or low-wage earners); and a lack of awareness on how to take advantage of social networks in order to obtain employment. The paper then discusses a variety of programs implemented by workforce development agencies to train low-wage job seekers to use networks, most involving the development of an “elevator pitch” and business cards, and providing opportunities for job seekers to mingle with individuals in the jobs or careers they hope to obtain. The most novel solution was one by Street Tech in San Pablo, California, who worked with LinkedIn to develop an online networking application for low-wage workers. I plan to investigate this tool further, so more to come on that.
Spaulding also discusses the difference between ‘weak ties’ and ‘strong ties’ in employment networks, which he says is a concept put forth by Mark Granovetter in a 1973 work, “The Strength of Weak Ties”. Granovetter explains that information on available jobs often comes from ‘weak ties’, or individuals that do not know the job seeker well and who cannot necessarily vouch for the employability of the job seeker. Clearly, the value of employment networks would be greatly enhanced for both job seekers and employers if a trusted intermediary were able to vouch for the job seeker’s work ethic and reliability.
This concept of “vouching” in the job search is fascinating, as it ties in with the critical role that social capital (one’s reputation and social network of acquaintances, co-workers and friends) has played in microfinance. When low-income people do not have collateral for the loan they are taking out, their reputation and social network can be put on the line instead. This insight, that the risk of losing one’s reputation and social network can be a powerful motivator to repay obligations, is the foundation of Grameen and other microfinance and group lending models. Clearly, the importance of losing one’s social capital in an urban environment – where new friends and contacts are readily available – is less acute than it is in a small village where transgressors must live among, and be punished by, the transgressed for years to come. Yet, I still believe that tying “vouching” to an individual’s social capital in a meaningful way could be prove a powerful way to recruit quality employees.
Do employees who refer another employee feel a risk to their own credibility if the employee they referred does not perform well? How can employees be incentivized to only refer those employees that they know will perform well? How can we formalize this “vouching” in order to leverage its power on a larger scale?
I was excited to recently come across a 2005 paper entitled “Getting Connected: Strategies for Expanding the Employment Networks of Low-Income People”, written by Shayne Spaulding and published by Public/Private Ventures.[1] This was a great primer on the importance of social networks to low-income job seekers. Spaulding cites research indicating that more than two-thirds of low-income job seekers find jobs through personal connections, compared to 40-50% of all job-seekers. Another study he cites reports that 88% of hiring managers for low-skilled positions rely on internal referrals from employees already working with them and that 64% use this as their primary recruitment method.
Spaulding then goes on to describe the challenges to effective utilization of social networks by low-wage workers. Among these challenges are; the small size of many job seekers’ networks; a reluctance to let peers or acquaintances know that they are looking for work; the homogeneity of employment situations among social networks (many unemployed or low-wage earners have social networks that include only other unemployed or low-wage earners); and a lack of awareness on how to take advantage of social networks in order to obtain employment. The paper then discusses a variety of programs implemented by workforce development agencies to train low-wage job seekers to use networks, most involving the development of an “elevator pitch” and business cards, and providing opportunities for job seekers to mingle with individuals in the jobs or careers they hope to obtain. The most novel solution was one by Street Tech in San Pablo, California, who worked with LinkedIn to develop an online networking application for low-wage workers. I plan to investigate this tool further, so more to come on that.
Spaulding also discusses the difference between ‘weak ties’ and ‘strong ties’ in employment networks, which he says is a concept put forth by Mark Granovetter in a 1973 work, “The Strength of Weak Ties”. Granovetter explains that information on available jobs often comes from ‘weak ties’, or individuals that do not know the job seeker well and who cannot necessarily vouch for the employability of the job seeker. Clearly, the value of employment networks would be greatly enhanced for both job seekers and employers if a trusted intermediary were able to vouch for the job seeker’s work ethic and reliability.
This concept of “vouching” in the job search is fascinating, as it ties in with the critical role that social capital (one’s reputation and social network of acquaintances, co-workers and friends) has played in microfinance. When low-income people do not have collateral for the loan they are taking out, their reputation and social network can be put on the line instead. This insight, that the risk of losing one’s reputation and social network can be a powerful motivator to repay obligations, is the foundation of Grameen and other microfinance and group lending models. Clearly, the importance of losing one’s social capital in an urban environment – where new friends and contacts are readily available – is less acute than it is in a small village where transgressors must live among, and be punished by, the transgressed for years to come. Yet, I still believe that tying “vouching” to an individual’s social capital in a meaningful way could be prove a powerful way to recruit quality employees.
Do employees who refer another employee feel a risk to their own credibility if the employee they referred does not perform well? How can employees be incentivized to only refer those employees that they know will perform well? How can we formalize this “vouching” in order to leverage its power on a larger scale?
[1] Spaulding, Shayne, “Getting Connected: Strategies for Expanding the Employment Networks of Low-Income People”, Field Report Series, Public/Private Ventures, November 2005.
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