How the invisible hand works

There is an update to this paper by Rand Ghayad who is working towards his PhD here at Northeastern University. It’s not pretty:

The results are equal parts unsurprising and terrifying. Employers prefer applicants who haven’t been out of work for very long, applicants who have industry experience, and applicants who haven’t moved between jobs that much. But how long you’ve been out of work trumps those other factors. As you can see in the chart below from Ghayad’s paper, people with relevant experience (red) who had been out of work for six months or longer got called back less than people without relevant experience (blue) who’d been out of work shorter.
 …
As long as you’ve been out of work for less than six months, you can get called back even if you don’t have experience. But after you’ve been out of work for six months, it doesn’t matter what experience you have. Quite literally. There’s only a 2.12 percentage point difference in callback rates for the long-term unemployed with or without industry experience. That’s compared to a 7.13 and 8.95 percentage point difference for the short-and-medium-term unemployed. This is what screening out the long-term unemployed looks like. In other words, the first thing employers look at is how long you’ve been out of work, and that’s the only thing they look at if it’s been six months or longer.
This is the Free Market at work. Employers have decided that people who have been out of work for more than six months aren’t worth the risk and so they don’t hire them. The employment problem has been solved by ignoring this group of people. This isn’t really completely logical–there must be many very qualified people in this class of long-term unemployed that most companies are ignoring and a company that took the time to look therefore would be able to get more qualified people for less money … and yet it doesn’t seem to be happening. And it certainly isn’t humane–these people are basically now out of the job market for the rest of their life. For committed Free Market people that’s just the way things are, but the rest of us should be demanding that the federal government get involved.

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