Employers in the Boom

Research Report

Employers in the Boom

How Did the Hiring of Unskilled Workers Change During the 1990s?

Abstract

In this paper, we present evidence on how a wide range of employer attitudes and hiring behaviors with respect to unskilled workers changed over the decade of the 1990s. We use a unique source of data: a set of cross-sectional employer surveys administered over the period 1992-2001. We also try to disentangle the effects of labor market conditions from broader secular trends. The results indicate that employers became more willing to hire a range of disadvantaged workers during the boom, including minorities, workers with certain stigmas (such as welfare recipients), and those without recent experience or high school diplomas. The wages paid to newly hired unskilled workers also increased. On the other hand, employer demand for specific skill certification rose over time, as did their use of certain screens. The results suggest that the tight labor markets of the late 1990s, in conjunction with other secular changes, raised hiring costs and induced employers to shift toward screens that seemed relatively more cost-effective.

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