Employers may be watching to see whether various proposals to ban discrimination against the unemployed in hiring become law. But the political debates shouldn’t distract companies from the heart of the issue: Bias against the jobless is risky business.
The risk boils down to lost talent, excessive salaries and tarnished reputations.
Yes, companies have a number of possible reasons for wanting to weed out unemployed candidates. In some fields, skills can become outdated. And out-of-work people may have lost jobs because they were not successful employees. As one commentator in a recent New York Times debate on the issue noted, employers have every right to question people about work history gaps.
But the notion that as a rule those out of work are less competent than their employed counterparts ignores the way companies have axed workers during the Great Recession and the ensuring, tepid recovery. Experts say firms are far from precise and not always fair in deciding whom to lay off. Jason Averbook, CEO of consulting firm Knowledge Infusion, estimates that 30 to 40 percent of the employees laid off by firms during the downturn were the wrong choices.
In some cases, organizations cut whole departments while outsourcing functions. That means top performers in fields such as accounting or information technology were cut despite their professional chops.
And given the ability of workers to polish up old skills or learn new ones on the job, ruling out some 14 million unemployed people means ignoring a vast pool of potentially productive employees.
Bias against the unemployed also can translate to higher labor costs. Workers in these economically uncertain times prize job stability. As a result, luring an already-employed person to a new job often requires a company to pay a steeper salary.
“Unless they are unhappy, employees today are going to demand a premium to move and give up the security of their current positions,” Ravin Jesuthasan, global practice leader for talent management at consulting firm Towers Watson & Co., told me recently. Meanwhile, unemployed workers desperate for a job might be willing to come on for a lower salary.
There’s yet another downside to putting up ads saying “unemployed persons need not apply.” It has to do with an intangible but precious corporate asset: a company’s good name. In this era of bad news going viral, stories of companies barring the unemployed from job opportunities can quickly give a firm a black eye or worse. Regardless of the reasons for such hiring policies, they smack of corporate callousness—of giving those who have suffered the most in the recession another kick in the shins.
No wonder companies caught seeking already-employed workers in their hiring sometimes reverse themselves on the spot. The New York Times said organizations including the University of Phoenix removed biased job ads once contacted by the newspaper.
If you operate in New Jersey, a new law prevents you from excluding unemployed people when you advertise job openings. And you may want to keep track of other states considering such rules, as well as federal legislation along these lines. But you can make things easier on yourself by avoiding bias against the jobless in the first place. That way, you can show you have a heart even as you protect your bottom line.
