Finding a Job When You’ve Been Out of Work a While

by Paul Oyer  |   11:00 AM January 21, 2014

While the economic recovery has marched steadily along, job growth continues to be anemic (see the latest Bureau of Labor Statistics report). So there are still plenty of people out there looking for work. How can they find the right match in this market?

Finding a new job is a lot like finding a new girlfriend or boyfriend, I would argue. Just as modern romances often begin on big websites nowadays, so do new jobs. While you might not think an economist’s input is going to help you find romance (though see my tips here), I would argue the same principles hold if you are looking for a job.

Today, I will focus on the idea of “Comments (4)” – or hidden information. In a dating context, consider a person who has been on a dating site a long time or a middle-aged person who has been single his or her whole life. What does this mean? It could mean the person has had bad luck but it could also mean that the person is not capable of maintaining a long-term relationship. For better or worse, people draw inferences along these lines when choosing mates. The old adage “where there’s smoke, there’s fire” may or may not hold for any given person, but the assumption that it holds is enough to kill a relationship.

It turns out that firms draw exactly the same inference all the time when picking employees. Long-term unemployment becomes a self-sustaining situation because people who are out of work a long time are assumed to be bad employees. You can lose your job at the height of a recession, go six months to a year looking for work as the recession continues, and then you have to face the fact that employers will see you as “damaged goods.”

Many job listings explicitly state that people who have been out of work for a while should not apply (or at least that currently employed people are preferred). One recruiter told the New York Times that his clients are “looking for someone who’s gainfully employed, who’s closer to the action.”

A recent economic study (with findings similar to other studies) looked at the response of employers to (fictitious) resumes that were identical other than the length of unemployment the person was experiencing. The likelihood of an “applicant” being called for an interview went down dramatically with the time since the person last worked. After eight months of unemployment, the chances of getting an interview were about 45% less than after one month of unemployment.

Firms also draw inferences based on the way employees lose jobs. Another economics studygrouped people who lost their jobs into two categories—those whose employer had permanently shut the facility and those whose employer had downsized but continued operations. They showed there is less stigma to losing a job when a company shuts down. These people were just in the wrong place at the wrong time and there is no reason to think that they were bad at their jobs, with the possible exception of those who ran the company. People whose firms continued operating, on the other hand, were assumed to be less productive. As a result, they were out of work longer and they were reemployed at lower wages.

There are several take-aways from these examples and studies.

1. Look for a new job before you lose your old job. You will never be in a stronger position to find a job than when you have one. (Granted, this only works if you, you know, have a job.)
2. Don’t lie on your resume, but try to put a positive spin on periods of unemployment (or be vague about them, if feasible.) Read over your resume and ask yourself what inferences and assumptions people will make about you. Then spend some time figuring out how to make those assumptions as positive as they can possibly be.
3. Do something while you are looking for your dream job. It’s better to be working (or otherwise productive in a way that will reflect well on your resume) than to be spending all your time looking for the perfect job. After all, by the time you find that job, they may not give it to you if you have been out of work a long time.

More blog posts by Paul Oyer

More on: Economy, Hiring

PAUL OYER

Paul Oyer is the Fred H. Merrill Professor of Economics at the Stanford University Graduate School of Business, a Research Associate at the National Bureau of Economic Research, and the Editor-in-Chief of the Journal of Labor Economics. His book Everything I Ever Needed to Know about Economics I Learned from Online Dating was released by Harvard Business Review Press in January.