They discovered evidence of hiring bias in entry level jobs, primarily by race - less so by gender. But in what may be the study's most significant finding, more profitable companies were less likely to demonstrate hiring bias, suggesting it is bad for business. JL
Claire Miller and Josh Katz report in the New York Times:
Economists recently performed an experiment on 100 of the largest companies in the US, applying for jobs using made-up résumés with equivalent qualifications. Employers contacted the presumed white applicants 9.5% more than the presumed Black applicants. (But) more profitable companies were less biased, in line with a long-held economics theory that discrimination is bad for business. That could be because the more profitable companies benefit from a more diverse set of employees. Or it could be an indication that they had more efficient business processes, in H.R.A group of economists recently performed an experiment on around 100 of the largest companies in the country, applying for jobs using made-up résumés with equivalent qualifications but different personal characteristics. They changed applicants’ names to suggest that they were white or Black, and male or female — Latisha or Amy, Lamar or Adam.
On Monday, they released the names of the companies. On average, they found, employers contacted the presumed white applicants 9.5 percent more often than the presumed Black applicants.
Yet this practice varied significantly by firm and industry. One-fifth of the companies — many of them retailers or car dealers — were responsible for nearly half of the gap in callbacks to white and Black applicants.
Two companies favored white applicants over Black applicants significantly more than others. They were AutoNation, a used car retailer, which contacted presumed white applicants 43 percent more often, and Genuine Parts Company, which sells auto parts including under the NAPA brand, and called presumed white candidates 33 percent more often. Known as an audit study, the experiment was the largest of its kind in the United States: The researchers sent 80,000 résumés to 10,000 jobs from 2019 to 2021. The results demonstrate how entrenched employment discrimination is in parts of the U.S. labor market — and the extent to which Black workers start behind in certain industries.
“I am not in the least bit surprised,” said Daiquiri Steele, an assistant professor at the University of Alabama School of Law who previously worked for the Department of Labor on employment discrimination. “If you’re having trouble breaking in, the biggest issue is the ripple effect it has. It affects your wages and the economy of your community going forward.”
Some companies showed no difference in how they treated applications from people assumed to be white or Black. Their human resources practices — and one policy in particular (more on that later) — offer guidance for how companies can avoid biased decisions in the hiring process.
A lack of racial bias was more common in certain industries: food stores, including Kroger; food products, including Mondelez; freight and transport, including FedEx and Ryder; and wholesale, including Sysco and McLane Company.
“We want to bring people’s attention not only to the fact that racism is real, sexism is real, some are discriminating, but also that it’s possible to do better, and there’s something to be learned from those that have been doing a good job,” said Patrick Kline, an economist at the University of California, Berkeley, who conducted the study with Evan K. Rose at the University of Chicago and Christopher R. Walters at Berkeley.
The researchers first published details of their experiment in 2021, but without naming the companies. The new paper, which is set to run in the American Economic Review, names the companies and explains the methodology developed to group them by their performance, while accounting for statistical noise.The study includes 97 firms. The jobs the researchers applied to were entry level, not requiring a college degree or substantial work experience. In addition to race and gender, the researchers tested other characteristics protected by law, like age and sexual orientation.
They sent up to 1,000 applications to each company, applying for as many as 125 jobs per company in locations nationwide, to try to uncover patterns in companies’ operations versus isolated instances. Then they tracked whether the employer contacted the applicant within 30 days.
A bias against Black names
Companies requiring lots of interaction with customers, like sales and retail, particularly in the auto sector, were most likely to show a preference for applicants presumed to be white. This was true even when applying for positions at those firms that didn’t involve customer interaction, suggesting that discriminatory practices were baked in to corporate culture or H.R. practices, the researchers said.
Still, there were exceptions — some of the companies exhibiting the least bias were retailers, like Lowe’s and Target.
The study may underestimate the rate of discrimination against Black applicants in the labor market as a whole because it tested large companies, which tend to discriminate less, said Lincoln Quillian, a sociologist at Northwestern who analyzes audit studies. It did not include names intended to represent Latino or Asian American applicants, but other research suggests that they are also contacted less than white applicants, though they face less discrimination than Black applicants.
The experiment ended in 2021, and some of the companies involved might have changed their practices since. Still, a review of all available audit studies found that discrimination against Black applicants had not changed in three decades. After the Black Lives Matter protests in 2020, such discrimination was found to have disappeared among certain employers, but the researchers behind that study said the effect was most likely short-lived.
On average, companies did not treat male and female applicants differently. This aligns with other research showing that gender discrimination against women is rare in entry-level jobs, and starts later in careers.
However, when companies did favor men (especially in manufacturing) or women (mostly at apparel stores), the biases were much larger than for race. Builders FirstSource contacted presumed male applicants more than twice as often as female ones. Ascena, which owns brands like Ann Taylor, contacted women 66 percent more than men.
Neither company responded to requests for comment.
The consequences of being female differed by race. The differences were small, but being female was a slight benefit for white applicants, and a slight penalty for Black applicants.
The researchers also tested several other characteristics protected by law, with a smaller number of résumés. They found there was a small penalty for being over 40.
Overall, they found no penalty for using nonbinary pronouns. Being gay, as indicated by including membership in an L.G.B.T.Q. club on the résumé, resulted in a slight penalty for white applicants, but benefited Black applicants — although the effect was small, when this was on their résumés, the racial penalty disappeared.
Under the Civil Rights Act of 1964, discrimination is illegal even if it’s unintentional. Yet in the real world, it is difficult for job applicants to know why they did not hear back from a company.
“These practices are particularly challenging to address because applicants often do not know whether they are being discriminated against in the hiring process,” Brandalyn Bickner, a spokeswoman for the Equal Employment Opportunity Commission, said in a statement. (It has seen the data and spoken with the researchers, though it could not use an academic study as the basis for an investigation, she said.)
What companies can do to reduce discrimination
Several common measures — like employing a chief diversity officer, offering diversity training or having a diverse board — were not correlated with decreased discrimination in entry-level hiring, the researchers found.
But one thing strongly predicted less discrimination: a centralized H.R. operation.
The researchers recorded the voice mail messages that the fake applicants received. When a company’s calls came from fewer individual phone numbers, suggesting that they were originating from a central office, there tended to be less bias. When they came from individual hiring managers at local stores or warehouses, there was more. These messages often sounded frantic and informal, asking if an applicant could start the next day, for example.
“That’s when implicit biases kick in,” Professor Kline said. A more formalized hiring process helps overcome this, he said: “Just thinking about things, which steps to take, having to run something by someone for approval, can be quite important in mitigating bias.
At Sysco, a wholesale restaurant food distributor, which showed no racial bias in the study, a centralized recruitment team reviews résumés and decides whom to call. “Consistency in how we review candidates, with a focus on the requirements of the position, is key,” said Ron Phillips, Sysco’s chief human resources officer. “It lessens the opportunity for personal viewpoints to rise in the process.”
Another important factor is diversity among the people hiring, said Paula Hubbard, the chief human resources officer at McLane Company. It procures, stores and delivers products for large chains like Walmart, and showed no racial bias in the study. Around 40 percent of the company’s recruiters are people of color, and 60 percent are women.
Diversifying the pool of people who apply also helps, H.R. officials said. McLane goes to events for women in trucking and puts up billboards in Spanish.
So does hiring based on skills, versus degrees. While McLane used to require a college degree for many roles, it changed that practice after determining that specific skills mattered more for warehousing or driving jobs. “We now do that for all our jobs: Is there truly a degree required?” Ms. Hubbard said. “Why? Does it make sense? Is experience enough?”
Hilton, another company that showed no racial bias in the study, also stopped requiring degrees for many jobs, in 2018.
Another factor associated with less bias in hiring, the new study found, was more regulatory scrutiny — like at federal contractors, or companies with more Labor Department citations.
Finally, more profitable companies were less biased, in line with a long-held economics theory by the Nobel Prize winner Gary Becker that discrimination is bad for business. Economists said that could be because the more profitable companies benefit from a more diverse set of employees. Or it could be an indication that they had more efficient business processes, in H.R. and elsewhere.
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