Why do managers have a preference for hiring employed candidates?
Google the phrase, “unemployed need not apply” or “no unemployed candidates will be considered” to read what CNN Money and other online business journals are saying about employer preferences. One bold faced job posting specified, “no unemployed candidates will be considered at all. No exceptions.”
Most employers don’t publish a preference for employed candidates, but insiders know it’s common practice. Unemployed candidates know it too.
“A contact followed-up on my application for an IT manager position in Chicago and the message was clear,” said Derek Stolpa, an unemployed IT manager with a bachelor’s and associate’s degree in Business Management and more than 12 years experience.
“Human resources said they consider the employed first, then the unemployed up to three months, and up to six months maximum. Candidates over six months are considered to have potential psychological issues,” he was told. “This is what I’m faced with, and I am near the end of unemployment funds and face losing my modest home. I fear what is to come for my family,” explained Derek.
Is it fair to prejudge candidates on the basis of job status? No. Unemployment is not a valid measure for screening out applicants. Recruiters and human resources professionals know that a proper selection process involves a combination of qualifiers such as experience, education, training, and other factors. It also includes a ranking system to determine a candidate’s final position relative to other candidates.
Does it even make good business sense to favor or hire employed applicants before the unemployed? Here are 10 great reasons why companies might want to consider hiring the unemployed first:
- Save money through the Hire Act: Employers who hire unemployed workers after Feb. 3, 2010 and before Jan. 1, 2011 may qualify for a 6.2 percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010.
- Tax credits for hiring unemployed veterans: Ever consider hiring from the military? Unemployed candidates include the honorably discharged military. Veteran candidates cost little or nothing to recruit and may possibly be eligible for relocation benefits paid for by the U.S. Government. Through Vetjobs.com and a Dallas based company called, CRI, there are specific tax credits available to employers that hire military veterans. Tax credits recovered may run from $1,500.00 to $8,000.00 per hire, and are a one for one dollar credit against the employer’s income taxes payable.
- No contact with employed candidate’s manager: Ever wonder why people say it’s easier to get a job when you have a job? It’s because employed candidates have the luxury of checking a little box on the job application that says, do not contact current supervisor. Performance issues can be easily hidden if the current employer doesn’t provide a reference.
- Employed candidates can be more expensive: An employed candidate has a job and therefore more negotiating leverage. Additionally, if a search firm is involved, the cost of recruitment goes up by 25 percent of a new hire’s annual salary, or $25,000 for a base salary of $100,000.
- Employed candidates can take longer to hire: Staffing metrics might be a lot easier to achieve if hiring managers didn’t have a preference for the employed. Unemployed applicants are available immediately and have an expressed interest in the company. Employed applicants are busy and take longer to schedule for interviews. They might need more time off between jobs to relocate or take a vacation. If employers are cold calling candidates from a list of purchased names, it’s takes even longer to recruit and hire.
- Layoff lists are not just for underperformers: Contrary to popular belief, not all underperformers are laid off. Legal conscious employers and those with AA/EEO obligations carefully plan a layoff to avoid lawsuits. A plan may include a series of steps which include an adverse or disparate impact analysis of a tentative layoff list. The purpose of this review is to detect patterns that may support a claim of discrimination. If such patterns are detected, adjustments are usually made to the layoff list to minimize any unintended impact on any protected groups.
- Cultural change can influence performance: Just because an employee was laid off for not being a top performer, doesn’t mean they don’t have the ability to be one. A recent online poll conducted by Right Management of 904 employees in North America revealed that 60 percent of employees intend to leave their jobs in 2010. Corporate culture and management style can raise or lower employee satisfaction, motivation, creativity and productivity. Given the right environment with positive leadership, most employees will blossom.
- Eliminating all unemployed candidates from consideration is a legal gamble: The Uniform Guidelines on Employee Selection Procedures (1978) was designed to provide equal employment opportunity without discrimination on the grounds of race, color, sex, religion or national origin. This includes recruitment and selection procedures. A company may unknowingly be in violation of one or more federal guidelines.
- Training Reimbursement Programs for New Hires: Most states offer programs to help qualified employers cover the cost of training new or existing employees. For example, the Illinois Employer Training Investment Program (ETIP) offers new or expanding companies up to 50 percent off the cost of training employees or new hires. The Wisconsin Workforce Development offers a program for qualified employers through the Division of Vocational Rehabilitation that will pay 50 percent of all salary and fringe expenses to train a new employee for up to 90 days.
- Most layoff victims are collateral damage from the economic crisis: The U.S. Department of Labor reported the economy lost 2.6 million jobs in 2008. The worst since 1945.