Based on a survey of employers, assesses the use of different types of agencies to fill low-skill jobs, the types of jobs commonly filled, and employers' experiences with agencies, including the quality of the applicants and the challenges they face

Gregory Acs

Pamela J. Loprest

English

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Workers with limited skills and experiencecan have a hard time finding jobs, espe-cially in a soft economy. And with limitedknowledge about the range of jobs avail-able to them, less-skilled workers may endup taking jobs that they cannot keepbecause poor pay, benefits, and prospectscombined with workplace inflexibility maymake it hard to balance the competingdemands of work and family. Job place-ment agencies can play an important rolein matching workers and employers, espe-cially less-skilled workers. These organiza-tions include private-sector recruitingfirms, community nonprofits, and govern-ment employment agencies. Their knowl-edge of the job market and relationshipswith employers can help workers find abetter job faster than they would on theirown. For employers, placement agenciescan reduce hiring costs by helping themquickly locate the best person for their jobopening. In this brief, we describe the role place-ment agencies play in helping employersfill noncollege jobs (those that do notrequire a college degree). We report onhow frequently employers are contacted byagencies and how often they use agenciesto fill noncollege jobs. We also discuss thetypes of jobs most commonly filled usingplacement agencies and employers’ viewson their experiences with these organiza-tions. We use data from the 2007 Survey ofEmployers in the Low-Skill LaborMarket—a national survey of employersthat have recently filled noncollege jobs.(See box for more information about thesurvey.)1Job placement agencies work with awide range of workers. Because we want tofocus on agencies that are helping less-skilled workers, we hone in on employersthat have been contacted by public or pri-vate agencies trying to place welfare recipi-ents. (Welfare recipients are a subset of allless-skilled workers.) Although thisapproach necessarily understates total con-tacts by agencies trying to place less-skilledworkers, it allows us to focus on an impor-tant subset of less-skilled workers.Almost three-quartersof noncollege employers contacted by agencies trying toplace welfare recipientshired the referred applicants.1Job Placement Agencies and the Low-Skill Labor MarketGregory Acs and Pamela LoprestEmployers in the Low-Skill Labor Market Brief No. 3, November 2008THE URBAN INSTITUTEThe Survey of Employers in the Low-Skill Labor Market is a national survey ofemployers with low-skill jobs. Firms with four or more employees that had hired aworker into a job that did not require a college degree within the past two years weresurveyed, representing about 2.1 million employers. Data were collected in springand summer 2007, with a final sample of 1,060 employers and a response rate of 54 percent. The data in this brief are weighted to represent the job opportunities forworkers in the low-wage labor market. Employers in the Low-Skill Labor Market2How Frequently Are PlacementAgencies Used in Hiring?Almost one in five employers who recentlyfilled noncollege jobs have been contactedby agencies trying to place welfare recipi-ents in jobs in the past year, and the major-ity of those contacted have hired theseapplicants. Overall, about three-quarters ofemployers contacted by a job placementagency trying to place welfare recipientsended up hiring recipients referred by thatagency.Public, private for-profit, and nonprofitagencies are all trying to place less-skilledworkers. Figure 1 shows the types of jobplacement agencies contacting employerswith noncollege jobs. The most frequentcontact reported by 14 percent of employ-ers is from community-based or nonprofitagencies. Some of these agencies may bereceiving public funds to carry out jobplacement activities. Many employers whowere contacted by a placement agencyreport contact directly by a public agency,including state employment service agencies (13 percent), welfare agencies (7 percent), and local public one-stopemployment centers (11 percent). How-ever, private commercial agencies are alsoinvolved in placing welfare recipients. Tenpercent of noncollege employers reportbeing contacted by private temporaryplacement agencies trying to place welfarerecipients.What Type of Employers ArePlacement Agencies Targeting?Job placement agencies trying to place wel-fare recipients are more likely to contactsome noncollege employers than others(figure 2). Twenty-eight percent of largefirms (with 100 or more employees) withnoncollege jobs were contacted by jobplacement agencies trying to place welfarerecipients, compared with only 8 percent ofsmall firms. Twenty percent of firms innonrural locations were contacted, com-pared with 12 percent of firms in ruralareas, although this difference is not statis-tically significant. A much higher percent-age of noncollege employers in the retailtrade and services industries was contactedthan in construction or manufacturingindustries. Because noncollege jobs in construc-tion and manufacturing tend to pay morethan those in retail trade and services (Acsand Loprest 2008), the placement agencyand worker may want to shift their focusto these industries. However, the differ-ence in contact rates across industries mayreflect practical concerns; the noncollegejobs in construction and manufacturingmay have higher skill requirements (pastexperience, specific training, etc.) thanthose in retail and services, and the clientsof these placement agencies may not, onaverage, meet these elevated require-ments. Another possibility is that manu-FIGURE 1.  Percent of Noncollege Employers Reporting Contact by Specific Type of Job Placement AgencySource: Survey of Employers in the Low-Skill Labor Market.Note: Employers can report contact from more than one type of agency.12.77.110.56.013.710.10.9State employmentservice agencyWelfareagencyOther publicagencyPrivate temporaryhelp agencyOther privateagencyCommunity-basedor nonprofitLocal public one-stopemployment centerEmployers in the Low-Skill Labor Market3facturing and construction are tradition-ally male dominated and most welfarerecipients are female.Employer Views on Quality ofContact with Placement AgenciesThe high percentage of employers that hirewelfare recipients from placement agenciessuggests employers view these agenciesand the applicants they refer positively. Weasked employers who were contacted byjob placement agencies to share their viewson the responsiveness of these agenciesand the quality of the candidates they refer.The majority of employers express positiveviews, although a significant minorityreport some problems.Most employers contacted by jobplacement agencies placing welfare recipi-ents report the responsiveness of theseagencies is excellent (11 percent) or good(55 percent). However, about 20 percentreport responsiveness is fair, and 10 per-cent say it is poor. In addition, mostemployers report the quality of the candi-dates referred by the placement agency isaverage compared to other candidates forthe same position across various rating cat-egories (figure 3). However, a sizeableminority reports candidates are worse than average (between 14 and 27 percentdepending on specific category). Two areasthat are a particular problem for welfarerecipients identified through placementagencies are transportation and child carearrangements. About one-quarter ofemployers report that the transportationand child care problems of candidatesreferred by placement agencies are worsethan those of other workers. Hiring a worker from a job placementagency is not necessarily the end of therelationship between agency andemployer. Employers that have hired froman agency or the new employee can receiveongoing services. Over three-quarters (78 percent) of noncollege employers thathad hired a welfare recipient referred by ajob placement agency reported receivingassistance after the hire. This includestraining, transportation assistance, childFIGURE 2.  Percent of Employers Contacted in the Past Year by Agencies Trying to Place Welfare Recipients in Jobs, by Employer CharacteristicsSource: Survey of Employers in the Low-Skill Labor Market.* Difference between contact rate for category and contact rate for all jobs not in category is statistically significant at the p <. 10 level.18.319.123.720.329.68.4*6.7*19.612.28.4*27.8*18.50 5 10 15 20 25 30 35Next-stepEntry-levelOther servicesHealth servicesRetail tradeManufacturingConstructionNonrural firmsRural firmsSmall firms (<100 employees)Large firms (100+ employees)All noncollege jobsPercentEmployers in the Low-Skill Labor Market4care assistance, and counseling or ongoingsupport for the new hire and conflict reso-lution, cultural competency, or diversitytraining for the employer. Finally, we asked all noncollegeemployers, whether they had been con-tacted by a job placement agency or not,about what job placement agencies coulddo to increase their companies’ likelihoodof hiring welfare recipients. All employersrated how much their chances of hiringwelfare recipients would increase (a lot,some, or not at all) if placement agenciesgave certain specific assurances about thereferred applicant, such as he or she hadgood basic skills or stable transportation.The results for seven different specificassurances are listed in figure 4. Overall,almost one-fifth of employers say “a lot” toall these assurances, and only 3 percent say“not at all” to all of them. About 60 percentof employers reported these assuranceswould increase their chances of hiring wel-fare recipients a lot. Two exceptions areassurance of participation in a work-experience program (typically a publiclysponsored or subsidized job) and stablechild care: less than half of employers saidthese two assurances would increase theirchance of hiring a lot. Although child carewas one area where employers rated re-ferred applicants as worse than average,assurance of stable child care would notaffect hiring chances for 22 percent ofemployers. ConclusionJob placement agencies trying to placeless-skilled workers (particularly welfarerecipients) in noncollege jobs are havingsome successes, but there is still room forexpansion. Almost three-quarters of non-college employers contacted by agenciestrying to place welfare recipients hired thereferred applicants. A majority of theseemployers viewed the placement agency’sresponsiveness positively and ratedreferred candidates similarly to other can-didates considered for the same job. Morethan three-quarters of those who hired awelfare recipient from a job placementFIGURE 3.  Employer Rating of Job Candidates Referred from Placement Agency Compared with all Other Applicants for the Same PositionSource: Survey of Employers in the Low-Skill Labor Market.Note: Data include only employers who report having been contacted by a job placement agency trying to place welfare recipients.22.726.917.919.620.913.620.672.368.077.275.474.482.075.15.05.14.95.04.74.44.2Child careTransportationInterpersonal skillsJob-specific skillsBasic skillsEnglish language fluencyDress/appearanceBetter than average Average Worse than average0 10 20 30 40 6050 8070 90PercentEmployers in the Low-Skill Labor Market5agency received services after the hire. Allthese facts suggest that employers in thenoncollege market have positive experi-ences with agencies placing less-skilledworkers.The downside of the story is that lessthan 20 percent of all employers thatrecently filled a noncollege job had beencontacted by a job placement agency tryingto find work for a welfare recipient in thepast year. While this reflects agencies tryingto place welfare recipients, and so mayunderstate the true rate of contact to placeless-skilled entry-level workers, it stillsuggests much room for expansion. In addi-tion, small firms and those in the construc-tion and manufacturing industries arecontacted far less often than large firms orfirms in other industries. Increasing contactsoverall and to a broader range of firmscould increase hiring for welfare recipientsin particular and less-skilled workers moregenerally. Also, most employers report thattheir likelihood of hiring welfare recipientswould increase a lot if they could receivecertain assurances from placing agencies. Tothe extent these agencies can provide ade-quate screening and assistance to crediblymake these assurances, they can improveplacements for less-skilled workers.Note1. The data in this brief reflect the percentage ofrecently filled noncollege jobs with employerscontacted by placement agencies. For ease of expo-sition, we refer to this as “percent of noncollegeemployers.”Additional InformationFor a comprehensive review of related research and amore complete discussion of the survey and findings,see Gregory Acs and Pamela Loprest, “Understandingthe Demand Side of the Low-Wage Labor Market”(Washington, DC: The Urban Institute, 2008).FIGURE 4.  Increase in Employer Likelihood of Hiring Welfare Recipients Given Specific Assurance from Job Placement AgencySource: Survey of Employers in the Low-Skill Labor Market.Note: Data include all noncollege employers.56.362.762.947.046.260.159.933.232.331.144.432.228.732.110.45.06.08.521.611.38.0Not at all Some A lot0 10 20 30 40 6050 70PercentGood work attitudeGood basic skillsJob-specific skillsWork experience programStable child careStable transportationNo criminal record orsubstance abuseTHE URBAN INSTITUTE2100 M Street, NWWashington, DC 20037Address Service RequestedNonprofit Org.U.S. PostagePAIDPermit No. 8098Easton, MDTHE URBAN INSTITUTE2100 M Street, NWWashington, DC 20037Copyright © 2008Phone: 202-833-7200Fax: 202-467-5775E-mail: pubs@urban.orgFor more information,call Public Affairs: 202-261-5709or visit our web site,http://www.urban.org.To order additional copies of this publication, call 202-261-5687 or visit our online bookstore,http://www.uipress.org.This series was funded by a grant from the Ford Foundation. The Survey of Employers in theLow-Skill Labor Market was jointly funded by the U.S. Department of Health and HumanServices and the Ford Foundation. The survey data were gathered by Mathematica PolicyResearch.The views expressed are those of the authors and do not necessarily reflect those of the UrbanInstitute, its board, its sponsors, or other authors in the series.Permission is granted for reproduction of this document, with attribution to the Urban Institute.

Job Placement Agencies and the Low-Skill Labor Market

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Job Placement Agencies and the Low-Skill Labor Market

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